Majority of businesses taking steps to avoid ObamaCare tax

Getty Images

Nearly two-thirds of companies facing a new ObamaCare tax say they are changing their coverage to avoid the extra costs, according to a new survey.

The so-called Cadillac tax, which applies to healthcare plans above a certain expense threshold, is one of the most pressing changes still to come under ObamaCare, according to a survey of about 600 members of the International Foundation of Employee Benefit Plans.

Only 2.5 percent of companies that would be hit by the Cadillac tax starting in 2018 said they plan to pay the tax. A total of 62 percent of companies said they have already taken action or plan to take action to avoid it.

ADVERTISEMENT
Most say they are shifting toward higher deductible plans, while others said they are reducing benefits, shifting more costs to employees or dropping high-cost plans altogether.

Under ObamaCare, healthcare customers who receive benefits above $10,200 for individual coverage and $27,500 for family coverage will be forced to pay a tax of 40 percent.

The tax, which has been increasingly under fire from Congress, is intended to help pay for ObamaCare.

Overall, many businesses are bracing for steeper healthcare costs as the rest of the law is rolled out by 2018.

About one-third believe 2016 will be their costliest year, when the law’s employer mandate starts to apply. Another 27 percent expect to pay the most in 2018, when the Cadillac tax goes into effect.

Despite the cost concerns, nearly 60 percent of respondents said “administration issues” were their biggest problem so far with the law. That is nearly three times as many who ranked “cost issues” as most important.

Still, the vast majority said their costs would rise under the law. Just 17 percent said they would see no change and 1 percent said they would see lower costs.

Overall, members broadly expect the law to have a “somewhat” or “very” negative impact on their businesses, which most believe will increase sharply over time. Currently, about 30 percent of people said they are neutral toward the law.