The Cadillac tax is top of mind for a lot of employers today. And even though the tax isn’t scheduled to take effect until 2018, many employers are beginning to prepare for it now. In fact, 53 percent of large companies and 17 percent of small companies offering health benefits have already conducted an analysis to determine if their plans will be subject to the tax, according to Kaiser.
The 40 percent tax will apply to employer-sponsored health benefits plans that exceed the cost limits set by the law. Understandably, this has many employers worried. Studies have found that a large portion of employer-sponsored health plans will be subject to the tax by 2018. Towers Watson estimates that nearly half of all U.S. employers will be affected.
In order to reduce their exposure to the tax, many employers are taking dramatic measures. For example, many are cutting benefits spending, whittling down plans, or shifting costs to employees. Other common tactics include:
- Increasing deductibles and other cost sharing methods
- Reducing the number and scope of services the plan covers
- Capping or eliminating tax-preferred Flexible Spending Accounts (FSA), Health Savings Accounts (HSA), or Health Reimbursement Arrangements (HRA)
- Eliminating higher cost health insurance plan options
Clearly, there are negative consequences to reducing benefits and shifting costs to employees. Furthermore, none of these changes lead to truly sustainable reductions to total healthcare spend — they’re simply band-aids.
Instead, to prepare for the Cadillac Tax, employers should focus on bending the cost curve while continuing to offer high-quality health benefits that attract and retain top talent. And, in order to do this, employer health benefits must become smarter. That’s where Jiff can help.
Jiff’s enterprise health benefits platform allows employers and employees to make smarter and more cost-efficient healthcare decisions by increasing engagement in digital health point solutions, delivering real-time performance insights, and offering personalized health incentives.
Increasing Engagement of Digital Healthcare Solutions
All too often, digital health point solutions go under-utilized. Tools and services like telemedicine, price transparency, and expert second opinions (to name a few) have the potential to deliver massive cost savings — but only if employees use them.
Jiff has consistently demonstrated that we can double and in some cases triple engagement in health benefit programs. This is accomplished this through our world class application of personalized incentives, recommendations, design, and game mechanics.
This increased level of engagement in point solutions leads to an uptick in adoption of healthy behavior, which ultimately drives down healthcare costs for the employer.
Using Data to Pinpoint Opportunities for More Savings
Many employers have already invested in a diverse portfolio of employee health benefits programs, apps, and digital tools. Some of these have delivered savings in the form of improved health and reduced medical spending, yet others don’t get used much and have had little impact — wasting the money spent on them.
Through Jiff’s Mission Control dashboard, employers will receive insights into which programs work and which do not. This makes it easy for them to pinpoint, and make real-time decisions, on where they should invest in future programs. In addition, Mission Control gives HR actionable insights on how to maximize the impact of their existing programs, by deploying specific engagement tactics such as employee communications, or by adjusting incentives or store credits.
Reallocate Budget Towards Personalized Incentives and Care Navigation
If all else fails, and employers still need to redesign the benefits package to come in below the tax thresholds, Jiff can turn the “perceived” loss into a “perceived gain.”
For example, oftentimes employees are upset about moving to a HDHP for the first time, when in fact this represents an opportunity to get them more engaged as informed healthcare consumers. Employers who recognize this can reallocate some of their benefits contribution budget — using a fraction of the savings from switching to HDHPs — towards new offerings that are actually quite valuable to employees, such as, personalized incentives, and a care navigator services.
Additionally, care navigation — provided through Jiff and our partners — can support employees as they make more decisions in their own care and coverage.
Employees may have an adverse reaction to increased deductibles initially, but by shifting these dollars to an engaging, personalized, incentives budget, employees may eventually perceive even greater value from their benefits.
With the Cadillac Tax countdown clock ticking, Jiff’s enterprise health benefits platform is a valuable tool for employers in preparation. Jiff gives benefits managers the insights they need to understand what benefits programs are working and which should be cut, and to personalize programs and improve employees’ use of benefits, which drives up ROI and helps the bottom line. With Jiff, employers can confidently navigate around the Cadillac Tax and help employees get the most out of their health benefits.
To learn more about the misconceptions surrounding the Cadillac Tax read our post debunking the 4 Cadillac Tax Myths.