Health care reform's 'Cadillac' tax to impact employer-backed plans - Baltimore Business Journal

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Health care reform's "Cadillac" tax will have an impact employer-backed plans.

For the most part, people who buy health insurance through their employer don’t have as much change to keep track of compared with people who buy on their own in the individual market. But that doesn’t mean they can tune out talk on insurance.

As I wrote Thursday, insurers are not expected to drop a significant number of employer-backed health plans, a problem that has angered thousands of people who buy insurance on their own, in the individual market.

One change that will affect employer-sponsored plans beginning in 2018 is a tax on high cost plans. The so-called Cadillac tax would require employers to pay a tax on health plans that cost more than $10,200 for an individual and more than $27,500 for a family.

The average employer-sponsored health plan had a premium of $5,884 for an individual and $16,351 for a family, according to the Kaiser Family Foundation’s 2013 Employer Health Benefits Survey.

The rule, part of the federal Affordable Care Act, is intended to slow growth in health care spending by cutting down on expensive health plans that proponents say encourage excessive spending on health care. The provision targets plans with the most robust sets of benefits that often require little employee contribution. The tax would likely require employees who previously had this type of plan to pay for more of their own health care, which opponents say could be a significant burden to sicker employees who rely on those plans to cover big health expenses.

While the tax does not go into effect until 2018, Bradley Herring, an associate professor at Johns Hopkins School of Public Health, says that employers may begin to make changes to their Cadillac plans over the next few years, “so they don’t have to do anything drastic.”

Sarah covers health care, higher education, biotech and technology.