Bracing for the Next Battle: Cadillac Tax or Honda Tax?

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By: Jody Mayo

The name is a bit misleading. The proposed excise tax on employee-sponsored health benefits, intended to target rich and robust benefits offered to a few elite, may actually affect many more employers and individuals. Experts say a majority of employers could eventually face the proposed tax on health care benefits.

The IRS began revealing details of how exactly the tax, proposed for 2018, will work though it doesn’t address much of the information employers need. Pundits argue that the 40 percent excise tax on the health benefits companies that provide their workers above a certain threshold may end up impacting many more households. In 2018, the tax will hit insurance and flexible spending, health savings and other health “perks” valued at more than $10,200 for singles and $27,500 for families. Anything above that amount will be taxed and may cause issues for individuals and employers who currently receive tax breaks. It also represents a big departure from a long-standing tax policy.

 
The current tax break is the reason employers provide millions of Americans with health benefits. The policy was enacted to help employers that were unable to increase compensation use fringe benefits to attract workers. But many economists have long argued that the open-ended health coverage drives up health care costs and benefits a small and already affluent population.

 
According to Kaiser Family Foundation, a nonpartisan health care organization, the average family plan costs $16,834 and the average individual plan cost $6,025 last year. Both are under the proposed tax threshold. But the tax also applies to tax-free medical perks like flexible spending and health savings accounts. The tax could even impact supplemental insurance plans and on-site medical clinics that employers provide for workers.

 
The other issue is that medical and insurance costs are growing much faster than the consumer price index (plus 1%) on which the tax is based. According to a benefit consulting firm survey as many as one-third of employers could be hit by the tax. Ironically, while the excise tax was intended to hit the most affluent Americans with elite fringe benefits plans, the reality is that unions may be the hardest hit because they have traditionally negotiated generous health plans.

So if the tax is not repealed, maybe they should at least rename it. If experts are right, the Honda Tax seems a more fitting name.

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The Latest on EEOC and Wellness Programs

The Equal Employment Opportunity Commission (EEOC) penned the next chapter of the ongoing saga between wellness programs and the Americans with Disabilities Act (ADA) when it issued proposed rules. The ruling focused on how employers use incentives, which health information employers can gather, and how to provide reasonable wellness alternatives.  The proposed rule states that an employer may offer limited incentives up to 30% of the total cost of employee-only coverage and that participation in wellness programs is voluntary.

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Manage Chronic Illness & The Bottom Line

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By: Mark McLean

Chronic illness is not only a drain on the health of employees, it poses threats to productivity and a company’s bottom line. So what can be done to help break the insidious cycle that threatens the financial health and well-being of individuals and companies? Benefits advisors are seeking creative solutions to the endemic issues related to chronic illness. One solution that has worked well for certain employers is establishing on-site medical clinics.  These facilities, staffed with nurse practitioners, are located on work premises and help people with high-risk and other health issues better manage their illness.

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Be the Change: Helping Those Who Cannot Help Themselves

By Chris Sill

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“The only thing necessary for the triumph of evil is for good men to do nothing”—Edmund Burke. Every day in America, almost 2,000 children will become victims of abuse or neglect. Across the country, there are Court Appointed Special Advocates (CASA) that volunteer their time to help these children find safe and permanent homes to grow and thrive.

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King vs Burwell: A Case of Linguistic Gymnastics

By Katie Prellwitz

The only thing that seems constant in ACA is change and controversy. King vs. Burwell is an ongoing legal battle now under review by the Supreme Court. It hinges on the simple question people are asking: Am I eligible for a government subsidy if I use a federally- facilitated exchange? In a case of linguistic gymnastics, two sides are hanging onto literal translations of ACA. Petitioners argue that the language in the statue says subsidies are only available to someone who uses a state exchange. The crux of government’s argument is that the ACA also states that subsidies are available on a state exchange or “such an exchange,” meaning the Department of Health and Human Services could establish an exchange on behalf of a state that opted not to establish its own.

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WIN/WIN Benefits Strategies

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By: Emily Bailey

Each year in the benefits industry we see the same routine repeated over and over again. Healthcare costs continue to rise and the most obvious choices you have to combat that trend aren’t ideal—you either increase employee payroll deductions or raise the co-pays and deductibles on the benefits plan you offer. These choices seem like the lesser of two evils, right?

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