Reduce Your Exposure to The Cadillac Tax

The only way for employers to reduce their exposure to the “Cadillac tax” on high-value health care plans is to implement strategies to cut costs, though it’s likely they will still be affected, according to panelists at the Midwest Business Group on Health 35th Annual Conference in Chicago.

Employers can also contact regulators and legislators to repeal or alter the 40% excise tax on health care premiums for those plans, Thomas Sondergeld, senior director of health and well-being for Walgreen Co., said during the discussion Wednesday.

“We need to get rid of this,” Deerfield, Illinois-based Mr. Sondergeld said. “This is a bane in our existence as benefits directors.”

The health care reform law’s excise tax would impose a 40% tax on group health care plan premiums that exceed a $10,200 threshold for individual coverage and $27,500 for family coverage beginning in 2018. Legislation for the repeal of the tax was introduced in the House of Representatives on Tuesday.

However, said panelists, employers should prepare now for the fast-approaching launch of the tax.

Mr. Sondergeld, who oversees the health benefits of 170,000 participants at Walgreens, said employers should study the regulations as they currently are, work with a consultant to fully understand the calculations the tax requires, and determine whether or not they will exceed the thresholds for coverage.

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Jeffrey R. Ungvary President

Jeffrey R. Ungvary