Cadillac tax brings more costs, less value to your health insurance

By Trudy Lieberman
Special to The SUN

More health insurance upheaval is coming your way. The value of your health insurance is shrinking and you may be paying more for less this year and in years to come.

Perhaps your employer has taken away the choice of plans with large provider networks and instead is offering those with a much narrower selection of doctors and hospitals. Some companies are enticing workers with lower premiums if they leave preferred provider organizations (PPOs), which let them use any provider, and choose health savings accounts. These are tax-advantaged savings arrangements coupled with catastrophic coverage and high deductibles. Others require employees to pay higher premiums for the plans they have.

Blame those changes on the Cadillac tax, a provision in the Affordable Care Act, which calls for a 40-percent excise tax on employer-provided health insurance. Employers pay the tax, but ultimately it’s passed on to some 60 million workers who have employer coverage.

The tax will be levied on the portion of health insurance premiums that exceed $10,200 for single and $27,500 for family coverage. Because premiums continue to rise (this year, the average family premium from employers is about $17,500), they have a strong incentive to lower the cost of coverage to avoid paying the tax. Many have begun making changes this year and experts believe there will be more adjustments as 2018 approaches when the tax takes effect.

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This story was posted on November 12, 2015.