A significant number of U.S. employers are taking immediate steps to avoid triggering the excise tax on high-cost health plans when the levy goes into effect in 2018, according to new research.
Aon Hewitt’s soon-to-be-released Pulse survey of 317 U.S. employers finds that 40 percent expect the excise tax to affect at least one of their current health plans in 2018. And 14 percent expect it to immediately impact the majority of their current health benefit plans.
Surprisingly, a quarter of employers say they haven’t yet determined the impact of the tax on their health plans. And more than one-third report that their executive leadership and finance teams have limited or no knowledge of the implications of the tax for their organizations.
5 significant changes
Of those employers that have determined the impact, 62 percent say they are making 5 significant changes to their health plans for 2015:
- One-third (33 percent) are reducing the richness of their plan designs through higher out-of-pocket costs, including 10 percent that say they will eliminate high-cost, rich design options.
- 31 percent are increasing the use of wellness incentives in their plans.
- 14 percent are evaluating private exchange options for pre- and post-65 retirees, while 7 percent are considering private exchanges for active employees.
- 14 percent are significantly reducing spousal eligibility or subsidies through mandates or surcharges.
- 5 percent are implementing narrow/high performance provider networks.
“While the excise tax provision of the Patient Protection and Affordable Care Act doesn’t go into effect until 2018, it is accelerating the pace of change for U.S. employers,” says Jim Winkler, chief innovation officer for Aon Hewitt’s Health business. “Over the next few years, employers expect to use both traditional and innovative tactics to make substantive changes to their health plans to minimize their exposure to the tax and put them on a path to lower rates of health care cost increases.”