Employers Rushing To Change Health Plans Before Obamacare Tax Hits

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Employers’ health care costs are going up again this year, but the biggest problem is a hefty Obamacare tax that will hit in 2018, according to a Wednesday survey.

Health care costs for employers are growing 4 percent in 2015 after changes in plan design are accounted for, according to a report from Towers Watson. The real growth rate is 5.2 percent in one year. But the biggest problem for employers offering health coverage won’t hit until 2018.

A vast 73 percent majority of businesses are concerned about Obamacare’s large excise tax on expensive health care plans. The so-called Cadillac tax will hit health plans with a 40 percent tax on any benefits valued at more than $10,200 a year — and employers are scrambling to limit their benefits before then.

Forty-three percent of employers surveyed told Towers Watson that figuring out a way to avoid the Cadillac tax will be their top priority in 2015, still two years before the excise tax actually takes effect.

“While employers are committed to providing health care benefits for their active employees for the foreseeable future, persistent concerns about cost escalation, the excise tax and workforce health have led to comprehensive strategies focused on both year-over-year results and long-term viability for health care benefits and workforce health improvement,” said Randall Abbott, senior consultant at Towers Watson.

In the meantime, workers should probably expect their employer-provided coverage to change significantly in the next several years. Eighty-one percent of employers are going to make “moderate to significant changes” to their employees’ health coverage over the next three years, before the biggest Obamacare tax takes effect.

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Tags : obamacare
Sarah Hurtubise