Consumer-Directed Health Care Plans Become More Attractive to Employers

Believe it or not, there was a time when there were hospital bills that were less than $100. And people would pay for that directly out of pocket. Then, poof! In the 1980’s and 1990’s when we all became medical insurance consumers, the huge mega-industry we know today was born.

For the past several decades, employers have enticed and retained cream-of-the-crop employees with extremely generous health insurance plans. Employees have not only come to expect such lavish fringe benefits, but employer-paid health insurance premiums have become almost as important as salary compensation itself.

Fast forward to 2015 and the industry is changing again. Employers are now dealing with the Affordable Care Act “Cadillac” Tax on luxury health plans.   The previously generous employers are racing to put an end to employer-funded plans and pass on health insurance costs to the employees.  

The “Cadillac” Tax will impose a 40% surcharge on health insurance spending in excess of $10,200 per individual or $27,500 per family, and employers will probably not be anxious to pay this penalty.  The option with which they are left is to pass on insurance costs to the their employees.  Often times when an employee is faced with having to bear this cost, they will choose to reduce health benefits or move towards an option like a high-deductible plan.

The tax does not take effect until 2018 but employers are already starting to change their policies to ensure they do not get stuck with a 40% surcharge. 
How will your company handle the “Cadillac” Tax?  Will you shoulder the burden, or will you pass part of it on to employees?

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