Delta Airlines has reduced the generous health benefits offered to its pilots in order to avoid a new federal tax on costly health plans, known as the “Cadillac tax.” Starting in 2018, most employers must pay a 40 percent excise tax on the amount that premiums for a health plan exceed $10,200 for an individual and $27,500 for a family.
“Given enough years, all plans will eventually risk being subject to the Cadillac tax and as they do, the natural reaction will be to continually reduce benefits provided,” wrote a Delta executive in a memo.
Why employers are shifting retiree health into insurance exchanges | Reuters - 0 views
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Thirty percent of companies that provide coverage to Medicare-eligible retirees (age 65 and over) already have moved to exchanges, according to an Aon Hewitt survey of more than 1,230 employers released last month.
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For Medicare-eligible retirees, employer benefits are supplemental. Retirees who use traditional fee-for-service Medicare might be offered a Part D (prescription drug) benefit, and a subsidized Medigap plan, which plugs coverage gaps in fee-for-service Medicare. Retirees using Medicare Advantage (all-in-one managed care plans) receive a subsidy toward buying those plans.
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oving to exchanges also can help employers avoid the looming risk of the so-called Cadillac tax on rich-benefit insurance plans.
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HEALTH REFORM: Expect Pluses, Minuses for Those With Job-Based Coverage - iVillage - 0 views
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Beginning in 2014, for instance, the reform package prohibits employer-sponsored health plans from excluding people from coverage based on pre-existing health conditions
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It also makes larger employers responsible for offering medical coverage. Beginning Jan. 1, 2015, businesses with more than 50 workers must offer health insurance to full-time workers and dependents or pay penalties.
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annual limits will be banned completely in 2014.
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Experts say smaller companies that employ 50 or more workers and currently provide health insurance may drop coverage because it would be cheaper to pay fines than maintain coverage for all of their workers. Most large employers (with more than 1,000 employees) remain committed to providing health benefits for the next five years, according to an employer survey by Towers Watson/National Business Group on Health. But just 26 percent are confident that they will be offering health-care benefits a decade from now. Meanwhile, a number of large employers are eyeing private health insurance exchanges as a way to continue providing job-based coverage while controlling spending on health benefits. Much like the public exchanges under the Affordable Care Act, private exchanges represent a new way for employees and families to shop for group health coverage and other benefits. Instead of offering a limited number of health plans, the employer would give workers a set amount of money to buy their own coverage. Kaiser, who works in Gallagher Benefit Services' Mount Laurel, N.J., office, anticipates a slow migration toward private exchanges. "I don't think it's going to be a mass disruption of employer-sponsored plans where they all go, 'I'm out of the game,'" he said. More information The University of California, Berkeley Labor Center, has summarized provisions of the Affordable Care Act affecting employer-sponsored insurance.
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