As more organizations study the Cadillac tax’s implications, it’s becoming clearer that even plans more along the lines of a Ford Focus could trigger the payment. And while there’s growing opposition to the tax, with pressure on the Obama administration to alter or scrap it, currently it remains a looming reality.
The American Bankers’ Association set out to investigate what the tax’s effect on health savings accounts might be. What the research forecast was that nearly a quarter of existing health savings account plans would trigger the tax as it currently is written — but that just 3 percent would actually have to pay the tax in 2018.
The association’s lead researcher admitted that the findings of how many plans might be technically liable weren’t what he’d expected, and they set off alarm bells. Still, HSAs may be somewhat cushioned from the tax — and that cushion could buy plan administrator time to adjust on their end and hope for political salvation from the halls of Congress.
Todd Berkley, a consultant, authored the study. His team attempted to address these questions: “Will the average HSA plan be affected by the tax and if so, when? Will higher cost HSAs be affected sooner? What if shocks to the system grow health premium costs faster than expected?” Data processed came from industry information on current HSA premiums, the distribution of current premium levels across the market, current health premium growth rates, and factored in inflation. The output was compared to the trigger points of the Cadillac tax rules.
Berkley observes that confusion reins around the Cadillac tax, that speculation is running wild and that interpretations of the impact are myriad, often assuming a gloom-and-doom scenario. Even given this, he said he was surprised by the implications of the research.