2 ways to skirt Obamacare’s ‘Cadillac Tax’

While there are plenty of health reform regs to worry about in the near future, there’s a good chance you’re already thinking about the “Cadillac Tax” that takes effect in 2018.

In fact, nearly one-third of employers are already making changes to their plans to prepare for this Obamacare reg, according to a recent Mercer study.

And with good reason. Starting in 2018, employers will be required to pay a 40% excise tax on the value on any healthcare coverage that exceeds $10,200 for single coverage or $27,500 for families in premium costs.

Many firms have already determined they’re likely to be impacted by this tax in 2018 or after.

Another plus for HDHPs

But here’s the good news: An increasingly popular healthcare strategy may be the answer to avoiding the tax.

High-deductible health plans (HDHPs) coupled with tax-advantaged accounts like HSAs should keep most firms from getting hit with the excise tax. That’s because HDHP premiums – the determining factor for excise-tax calculations – are generally lower than other plans.

While many employers have at least added an HDHP, they’re generally not the only option available to workers.

So now may be a good time to talk to your broker about ways to get your entire workforce on an HDHP before the Cadillac Tax takes effect.

Tax rolled into premium costs

Of course, if you’d still like to give employees different plan options, there’s another strategy to consider.

Some employers are looking at making two plans – an HDHP and a more generous plan – available.

If employees opt for the more generous plan, they’ll be responsible for paying the excise tax, which will be rolled into their share of the premium cost.