Employee Benefits News examines legal developments that impact the employee benefits and executive compensation employers provide, including federal and state legislation, rules from federal...
Oct. 15 — A large majority of employers expect the ACA's Cadillac tax to impact their plans, but many of those employers haven't calculated when the tax will hit their plans or taken steps to reduce generous benefits to avoid it, according to a report from Deloitte & Touche LLP.
Most employers think the Affordable Care Act's 40 percent excise tax on higher-cost health plans will influence their ability to keep offering valuable health benefits to employees (91 percent of respondents) or rely on those benefits to recruit or keep employees (92 percent), according to the report, “Are employers prepared for the ‘Cadillac' tax?,” issued Oct. 15.
Despite all of this concern, many employers haven't prepared to implement the tax, the report found. Just 37 percent of those surveyed have calculated their exposure to the tax, which is set to take effect in 2018, and 34 percent haven't even considered doing so, the report said. Only 38 percent indicated they have tried to estimate the first year the tax will apply to their plans, and 33 percent that they haven't thought about taking that step.
Thirty-two percent of employers have started reducing the generosity of their benefit offerings to avoid the tax, while 36 percent haven't even considered doing this. Twenty-seven percent have moved to offering different tiers of benefits to eliminate benefit options that would hit the tax, but 34 percent haven't considered taking this step, Deloitte said.
Though there have been efforts on Capitol Hill to repeal the tax, the report said employers should be proactive about preparing their plans for it.
“Companies have limited time to make changes to avoid any unexpected tax liabilities and put in place the processes needed to comply with these significant new administrative requirements. Importantly, it could take several years to realize the impact of initiatives that have the potential to reduce longer-term health care costs,” the report said.
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