Questions on Open Enrollment and the Cadillac Tax

As we have explained before, the ACA imposes a “Cadillac tax” intended to supplement benefits for the uninsured. The idea is that by forcing employers to pay a 40% excise tax on the cost of any premium health plans they may offer employees, the ACA can be funded by employers who “can afford” to help pay for it.

Is it fair? Definitely not. And with the 2016 open enrollment season starting on November 1, this is the time for employers to make the changes they need to make in order to circumvent the Cadillac tax. In fact, GM&A is among those healthcare consultants who believe this may be employers’ last chance to make the changes that are necessary if they want to avoid this penalty.

Why is that? Because although the Cadillac tax technically stays latent until 2018, it can take years to make the required changes on the employer’s part. Adjustments to the company health plan have to be made in small increments, so as not to alarm employees. Remember, maintaining consistency in your company health plan is important for employee retention – so in order to get ready for the Cadillac tax implementation of 2018, those changes have to start now.

How do you do it? You mean, how do you start implementing changes now in the 2016 open enrollment season? First, recognize that the Cadillac tax will be imposed on health plan premiums that exceed $10,200 for single coverage and $27,500 for family coverage. This means you will want to slowly lower employee contributions and premiums, while still attempting to provide your employees with coverage that is parallel to what is currently offered. Does that sound like something you can do?

It might not – but when we introduce you to direct contracting, that’s exactly what GM&A can help you with. By negotiating directly with providers and hospitals, we create a customized health plan network for our employer clients; the result is lower premiums for the employer and consistently good benefits for employees.

The great thing about open enrollment is that it offers employers a clean slate when they need it. This is the time when enrollees have an opportunity to seek out plans with lower costs, and we can help them do it. Remember, though: The open enrollment period is November 1 to January 31. After that, employers are stuck with their current plans for another year. That’s why the early part of open enrollment is the time to start learning about your options; contact GM&A for a complimentary health plan consultation.

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