4 strategies to consider now to avoid the Cadillac Tax
October 6, 2015 2:05 PM
The employer excise tax on high-cost health plans, commonly called the Cadillac tax, is set to take effect in 2018. That may seem three years away, but in reality, employers have one year left to implement changes. Since plan offerings for 2016 are pretty well cemented now for most large employers, and with the 2017 planning season right around the corner, now is the time for employers to execute on strategies to avoid the tax, says Don Garlitz, senior vice president, bswift. So what changes are employers likely to consider?
[Image: Fotolia]
[Image: Fotolia]
1) Defined contribution vs. private benefit exchange
Employers are considering the defined contribution approach to medical plans at about twice the rate they are considering private exchanges, according to the 2015 bswift benefits study. This gap could be in part due to the lack of a standardized definition of a private exchange, Garlitz says. The bottom line is that employers are considering ways to empower employees to decide how to allocate and spend their benefit dollars.
[Image: Fotolia]
[Image: Fotolia]
2) More plan options
Employers are generally cautious about eliminating popular high-cost plans due to the perception of a benefit take away. But given the likely cost shift of the Cadillac tax to the employee, less-expensive plan offerings, including HDHPs and narrow network plans, Garlitz says, give the employer a way to strongly encourage employees to vote with their wallets and buy down to less rich and less expensive plans.
[Image: Fotolia]
[Image: Fotolia]
3) Decision support technology
How can employers help employees make sense of an array of new choices? The bswift study shows that while 83% of large employers already offer self-service online enrollment tools to employees, only about a third are currently offering some kind of decision support tool. Technologies, such as avatars, create an easy, intuitive and engaging enrollment experience to help people make the best decisions for themselves and their families, Garlitz explains.
[Image: Fotolia]
[Image: Fotolia]
4) Accountable care organizations
Employers looking for high quality, low cost health care may also consider ACOs as part of their plan offerings. An ACO is a health care provider that is paid based on giving high quality care, where the provider shares in the savings achieved when total cost of care is lower than benchmarks, Garlitz says. ACOs are not available in all markets, but where they are, they represent a great opportunity for savings and quality, he adds.
[Image: Fotolia]
[Image: Fotolia]
