Obamacare 'Cadillac Tax' Causing Large Companies to Slash Health Benefits

Tuesday, 26 Nov 2013 08:19 AM

By Melanie Batley

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Large companies that provide generous health insurance plans to their employees are slashing benefits to prepare themselves for a new Obamacare tax.

Under the new healthcare law, a 40 percent excise tax — referred to as the "Cadillac tax" — will be levied on the most expensive health plans from 2018. The tax kicks in if  a company's annual healthy-insurance cost exceeds $10,200 for an individual and $27,500 for a family.

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According to NBC News, many large employers are already shifting higher premium costs to employees and decreasing benefits in the form of higher deductibles, co-payments, and out-of-pocket limits. In some cases, companies are withdrawing benefits for spouses who have access to coverage elsewhere.

"We've had employers shifting costs to employees for some time. But this is really very different," Robert Laszewski, president of Health Policy and Strategy Associates, told NBC News.

"This is more of a seismic change, because most employers are looking forward to this Cadillac tax in 2018 and realizing they're going to have to get ready for it now. And you can't just shift costs to avoid it. You have to cut benefits."

A survey of Fortune 1000 companies by Towers Watson found that 60 percent of companies said the tax is already having a "moderate" or "significant" impact on benefits decisions for 2014 and 2015, according to NBC News.

The government, however, disputes claims that Obamacare is causing employers to change their healthcare plans.

"There is nothing in the law that tells you you need to raise copayments or deductibles," Jason Furman, White House economic adviser, told NBC News. "In fact, the law limits your ability to shift costs to your workers… For the most part, very little will change for people getting their insurance through large employers.

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