Health care premiums up, employers look for Cadillac tax curbing measures

Health care premiums up, employers look for Cadillac tax curbing measures

If an employer says they don’t have concerns about the Affordable Care Act’s looming excise tax set to go into effect in 2018, they’re probably fibbing. One in five employers with 200 or more employees say their health plans will exceed the threshold limits which begin in 2018, according to the latest report from the nonprofit Kaiser Family Foundation and the Health Research & Educational Trust.

Thirteen percent of employers offering health benefits say they have made changes to their plans to avoid reaching the excise tax thresholds, set at $27,500 for families and $10,200 for individuals, and 8% say they’ve switched to a lower-cost health plan, the research, released today, notes.

“Our survey finds most large employers are already planning for the Cadillac tax, with some already taking steps to minimize its impact in 2018,” said study lead author Gary Claxton, a KFF vice president and director of the Health Care Marketplace Project. “Those changes likely will shift costs to workers, but exactly how and how much will vary for individual workers.”

Some examples of steps employers say they’ve taken to reduce costs include eliminating a hospital or health system from a network (9%) or offering a narrow network plan, generally considered more limited than the standard HMO network (7%).

But employers aren’t the only ones eyeing health care budgets and looking for cost-saving measures.

Employees saw their out-of-pocket medical costs jump again this year, as the average deductible for an employer-provided health plan surged nearly 9% in 2015 to more than $1,000.

The annual increase, though lower than in previous years, far outpaced wage growth and overall inflation and marked the continuation of the cost-shifting trend.

Over the past decade, the average deductible that workers must pay for medical care before their insurance kicks in has more than tripled from $303 in 2006 to $1,077 today, according to the report.

“We’ve been in a long period of relatively modest premium increases,” Claxton said Tuesday. “As the economy improves, we believe that tends to push it upward,” he added, also noting that the excise tax could in fact also keep premiums from spiking too quickly.

Another Affordable Care Act change that went into effect this year required employers with 100 or more full-time employees to offer health benefits that meet minimum standards for value and affordability or pay a penalty – employers with 50 or more FTEs will be required to do so next year.

Of companies reporting at least 100 FTEs (if unknown, employers with 100 employees), 5% say that they offered more comprehensive benefits this year to some workers who previously were only offered a limited benefit plan, and 21% say that they extended eligibility to groups of workers not previously eligible.

Among employers with 50 or more FTEs (if unknown, employers with 50 employees), 4% reported that they changed some job classifications from full-time to part-time (less than 30 hours per week) so employees would not be eligible for health benefits, while 10% reported changing some job classifications from part-time to full-time to enable workers to obtain coverage. Four percent also report reducing the number of full-time employees they planned to hire because of the cost of health benefits.

Wellness programs have also been one of the newer avenues employers have taken to lower health care costs in recent years.

Life coaching programs still seem to be the wellness program of choice among a majority of the employers surveyed, such as smoking cessation and weight-loss programs. In addition, 38% of those offering one of these wellness programs provide a financial incentive for employees to participate or complete the program.

Among the employers offering incentives, 15% offer a maximum incentive greater than $1,000 for all of a firm’s health and wellness programs, including any incentives for health screening.