Avoiding PPACA excise tax a priorityNews added by Benefits Pro on August 21, 2014

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By Dan Cook

Despite foreseeing record-breaking employee health care costs in the near term, major employers will continue to offer coverage to full and part-time workers. However, coverage for spouses and dependents could be targeted for cutbacks.

That’s the latest from a Towers Watson survey that found employers generally anticipate a 5.2 percent increase next year in health plan costs, which would put coverage cost per employee at an all-time high, Towers Watson said.

However, many employers are planning to make design changes to their plans. Should they occur, employers then project a 4 percent plan increase.

“Despite this cost trend, most (83 percent) employers consider health benefits an important element of their employee value proposition, and plan to continue subsidizing and managing them for both full-time and part-time active employees,” Towers Watson said. Virtually all of these large employers surveyed said they will continue to offer health benefits to employees, with few indicating they were ready to move coverage to a private exchange.

The results were gleaned from the company’s 2014 Health Care Changes Ahead Survey.

Large employers were asked about their health care-related cost concerns for the future. A major one is the excise tax that goes into effect in 2018 as part of the full rollout of the Patient Protection and Affordable Care Act.

“Nearly three-quarters (73 percent) of employers said they are somewhat or very concerned they will trigger the tax based on their current plans and cost trajectory,” Towers Watson said. “More than four in 10 (43 percent) said avoiding the tax is the top priority for their health care strategies in 2015. As a result of the excise tax and other provisions of the health care reform law, CEOs and CFOs are more actively engaged in strategy discussions.”

The objective is not to eliminate or even substantially reduce employee coverage, Towers Watson said, but to continue to manage costs as finely as possible without gutting coverage.

“The emphasis is on achieving or maintaining a high-performance health plan,” said Randall Abbott, senior consultant at Towers Watson. “And CFOs are now focused on a new gold standard: managing health cost increases to the Consumer Price Index. This requires acute attention to improving program performance.”

Originally published on BenefitsPro.com
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