A growing number of companies that offer ‘Cadillac’ insurance plans are taking steps to scale back the coverage plan before an excise tax under the Affordable Care Act takes effect in 2018, the New York Times reports.
Under the ACA, insurance plans or businesses that offer health plans with annual premiums of more than $10,200 for individuals or $27,500 for families would pay a 40% excise tax on the portion of the premiums that exceeds those thresholds.
A recent survey by the International Foundation of Employee Benefit Plans found that 17% of employers this year have changed their employee benefits plans as a result of the tax, up from 11% in 2011.
Companies seeking to avoid the tax are considering various strategies. Some companies might require employees with diabetes to enroll in a special management program or require workers to undergo a supplementary health screening to determine their risks for developing a high-cost condition.
It has also been reported that later this year Humana and UnitedHealth Group will begin offering smaller businesses in selected markets the option of so-called self-insurance as part of a strategy to reduce the expected cost increases stemming from the ACA.
Under the self-insurance model, companies cover the medical costs of their workers directly, instead of through a traditional managed-care plan. Larger companies tend to favor this model because it can give them more control over employees' benefits and lower costs.