Good, even great, health insurance is a perk of a good job with a good company but more and more this is not the case. Many people are experiencing more out of pocket expenses since the implementation of the Affordable Care Act. Policies now have much higher deductibles, and, in some cases, more shared costs. If ACA continues and the Cadillac Tax is not repealed this will increase in 2018. What is the Cadillac Tax? The Cadillac tax is a permanent 40% nondeductible excise tax on employer-sponsored health plans and benefits that cost the company over $10,200 per person or $27,500 for a family. The tax applies to health plans including behavioral and prescription coverage, Wellness plans, heath savings and reimbursement accounts, onsite medical clinics and executive annual physical programs. Let’s say the total of all the healthcare coverage provided by your company for your benefit equals $12,000. The currently proposed threshold is $10,200. In this example, the difference between the threshold and the company benefit is $1800. The $1800 is taxed at 40% so the company will owe a tax of $720. Companies will look for other options to avoid paying this nondeductible tax. Options will include offering only high-deductible policies, and reduction or elimination of other benefits that contribute to the $12,000 cost per employee.
One thing companies can do is offer voluntary benefits. The tax does not apply to accident, disability, stand-alone vision and dental, disease specific (cancer-critical illness), or benefits secondary to medical coverage (gap) insurance.
Some companies may provide a defined contribution, a set amount of money the company will contribute to pay for voluntary benefits. Other companies may offer voluntary benefits at a group rate payable through a payroll deduction. Yes, in that case, you may need to pay for this yourself but the cost of a dental, vision or gap plan may be less than out of pocket costs. Evaluate you anticipated medical expenses. A trip to the dentist or a new pair of glasses may be far more expensive than the insurance. Some companies recognize the changes required by the Accountable Care Act may be a challenge for their employees. Offering Voluntary Benefits is one way to make you feel better about the changes in health insurance and fill in the gaps in coverage. Companies may provide,Teladoc and medical information programs at no cost to employees. Teledoc offers 24/7 access to a licensed physician in your state. Teladoc saves time and money for minor ailments. With this new model, there are choices. Choices are the feel good part of the changes. You now get to choose what you want and need, and the options are growing. A young and healthy person may be more interested in pet insurance than more health coverage. A family with small children may want Teladoc coverage and an accident policy. An older employee may select a Lifetime Benefit Term policy that will provide for critical illness or long-term care if needed, in addition to life insurance. This is the new model in health insurance. Some companies are even offering merchandise purchase programs. Sometimes choice can be good. Even if Congress repeals the Cadillac Tax, the high deductible policies are probably here to stay. Know what you need and make the best use of the plans offered. Choosing well and wisely may be your only option for feeling better about the changes in your health insurance.