Cadillac tax strategies from MIIA - Templeton's Health Insurance provider

The two-year delay of the tax may provide a sense of relief, but in actuality it is more important than ever to act now to mitigate the damaging impact that the tax will cause. Strategies that municipal leaders may consider include the following:

• Reduce the richness of plans by increasing out-of-pocket payments such as copays and deductibles and/or implementing co-insurance features

• Limit or eliminate FSA, HSA and/or HRA programs that count toward aggregate cost

• Eliminate high-cost plans

• Adopt lower-cost limited network plans

For Massachusetts municipal employers, any significant steps for reducing aggregate cost typically cannot be taken without collective bargaining – with the exception being changes that can be made pursuant to Chapter 32B, sections 21 and 22, of the General Laws. Under these two sections, municipal employers may include – as part of their health plans – co-payments, deductibles, tiered provider network copayments, and other cost-sharing plan design features that are no greater in dollar amount than those features offered in the Group Insurance Commission’s most popular plan.

Because the GIC’s plan design features have changed in the past two years, the procedure established in state law may prove beneficial even for employers that have used it previously. And if the GIC must make further plan design changes to reduce exposure to the excise tax, municipal employers will be able to replicate those changes pursuant to the procedure laid out in sections 21 and 22.

Jeff Bennett