Companies are changing designs of their
medical plans due to taxes related to Obamacare’s Patient Protection Act and
Affordable Care Act (ACA) provisions. In a study released jointly by HighRoads
and Corporate Executive Board (CEB), it was found that many employers are
beginning to scale back their medical plan designs to avoid paying the ACA “Cadillac
Tax,” which will go into effect in 2018.
The report, “2014
Medical Plan Trends,” also shows employees are experiencing an increased share
of upfront costs for health care, an increase in high-deductible plans, a
greater number of plans with coinsurance charges, higher out-of-pocket
maximums, and increases in emergency room copayments.
Companies are reviewing
their health plans and looking to for a more cost-effective use of medical
benefits by exposing plan participants to more of the upfront costs.
In 2018, the ACA will
impose a 40% excise tax on benefits if the value of the health insurance
benefits exceeds the threshold for a plan that costs more than $10,200 for an
individual and $27,500 for a family (indexed for inflation). The report shows
that companies are starting to transform their benefits plans to prepare for
this requirement in ways that include:
- Two-thirds of 2014 medical plans have
individual, in-network out-of-pocket maximums (OOPMs) of $2,500 or more.
This is up from 58% of plans in 2013, and 49% in 2012;
- Forty-two percent of plans charge coinsurance
for office visits, up from 35% in 2013;
- Emergency room visit copayments have increased
by roughly $3 per year since 2009, with a 2014 average of $113 per visit;
and
- The percentage of plans with high deductibles
grew by 2% in 2014, from 23% to 25%.
In addition to trends
related to greater plan participant cost sharing, the report finds some
positive trends that can be attributed to the ACA, including:
- More generous coverage for mental health. The
average copay for an inpatient mental health visit dropped by 3% from 2013
to 2014; and
- Greater free preventive coverage. Nearly all
2014 plans cover 100% of patient costs for in-network cancer screenings,
immunizations and other preventive services.
HighRoads is a
provider of benefits plan management and health care compliance services. Corporate
Executive Board (CEB) is an executive consulting and advisory firm.
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