Many employers already worried about so-called 'Cadillac tax'

Many employers have wondered about just how the various aspects of the Patient Protection and Affordable Care Act will end up impacting their bottom lines, and one of the largest concerns that many companies may have is whether they will be hit with a tax penalty which would be applied specifically for their providing workers with high-value health insurance.

The “Cadillac tax,” as it's known, does not go into effect until 2018, but many companies that buy health insurance policies are already concerned about the potentially massive effect that such a penalty could have on their bottom lines, according to a report from the Pittsburgh Business Journal. This tax will end up impacting companies that offer health care plans with values of $10,200 for individual workers, or $27,500 for families, or more. If businesses exceed that number, they will be penalized at 40 percent of the value of such plans.

Some experts are concerned by this new rule, because while it will certainly hit businesses regardless of size when they offer more comprehensive health insurance, this may be particularly impactful for smaller companies, as they are not required to provide coverage for their workers if they have fewer than 50 employees, but many do so anyway as a means of attracting top-shelf candidates for job openings, the report said. Therefore, if they are hit with this 40 percent tax, they may not be able to afford to continue covering their employees and could therefore lose out on those higher-quality workers.

What could exacerbate the problem?
Meanwhile, it's also important for businesses of all sizes to make sure they're aware of another provision of how this tax might affect them in the coming years, the report said. While many companies may try to further assist their workers in paying for their health coverage by making contributions to health savings accounts and even health reimbursement accounts, these, too, would count toward those $10,200 and $27,500 limits, regardless of whether employers actually buy them coverage beyond these contributions.

Health insurance companies should certainly try to do all in their power going forward to make sure their business clients are fully aware of all the ways the various machinations of the ACA will end up impacting their bottom lines, and help them to determine exactly which type of plans will work best for their unique financial and benefits-related needs.