ACA Cadillac Tax Remains a Threat to Significant Number of Employer Health Plans

September 16, 2016

A new Kaiser Family Foundation survey report finds a significant number of employer health care plans will hit the Cadillac Tax in 2020 as premiums continue to rise faster than inflation.  According to the report, over 25 percent of employers with 5,000 or more employees say their largest health care plan will be subject to the Cadillac Tax in 2020.  In order to avoid the tax, employers have had to increase cost sharing and move to high-deductible health plans.  For the first time, more than half of employees have deductibles of at least $1,000, and the average annual deductible for single coverage provided by large employers jumped by more than 12 percent to $1,238 in 2016.  Although total premiums for large employers (5,000 or more employees) only increased 2.2 percent for individual coverage and 1.8 percent for family coverage in 2016, this was still three times faster than inflation.  Separately, the Census Bureau reported this week that employment-based health care benefits continue to play an important role in the U.S. system by providing coverage to over 177.5 million Americans (55.7%), and according to a recent Glassdoor survey, the single biggest impact on employee satisfaction was the quality of employer-provided health insurance plans.