Lavish ‘Cadillac’ Health Plans Dying as Obamacare Tax Looms

by Alex Wayne and John Lauerman  |  published on January 8, 2015

Large employers are increasingly putting an end to their most generous health-care coverage as a tax on “Cadillac” insurance plans looms closer under Obamacare.

Employees including bankers at JPMorgan Chase & Co. (JPM) and college professors at Harvard University are seeing a range of moves to shift more costs to workers. Companies are introducing higher deductibles and co-payments, rising premiums and the imposition of wellness programs that carry penalties for people who don’t comply.

Requiring employees to shoulder more of the cost burden may undermine public support for Obamacare just as Congress, now firmly under Republican control, considers new ways to gut the law.

The tax takes effect in 2018, and employers are already laying the groundwork to make sure they don’t have to pay the 40 percent surcharge on health-insurance spending that exceeds $27,500 for a family or $10,200 for an individual. Once envisioned as a tool to slow the nation’s growing health-care tab, the tax has in practice meant higher out-of-pocket health-care costs for workers.

“I don’t think there’s any employer that’s planning on paying that tax,” Steve Wojcik, vice president of public policy for the National Business Group on Health, which represents large employers, said in a phone interview.

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