The Health Care Reform Law has done many things, but more than anything, it has created uncertainty. “Will I be able to keep my plan?…Will I be able to afford my premiums?…Will my doctor be covered?” And the uncertainty continues…“Will I be able to keep my HSA or FSA?”
In 2018, the “Cadillac Tax” is scheduled to go into effect. The Cadillac Tax will impose a 40% tax on the cost of health coverage that exceeds pre-determined thresholds. For 2018, these are set at $10,200 for individual coverage and $27,500 for family coverage. The value of health coverage includes the cost of premiums, FSA contributions, and HSA contributions made by both employers and employees on a pre-tax basis.
Studies suggest as many as 50% of employers would have at least one plan subject to the tax within five years of the tax becoming effective. In most cases, employers have no plans to pay the tax and are looking at ways to cut costs and benefits. According to the American Health Policy Institute study of the ACA Excise Tax, large employers are already cutting back or eliminating employee contributions to FSAs (19 percent) and HSAs (13 percent).
As higher deductibles have become more common place, FSAs and HSAs have provided employees with a much needed lifeline to save for out-of-pocket expenses. Without access to these accounts, employees with health conditions or unexpected medical expenses will be scrambling to pay bills and be susceptible to financial issues, such as bankruptcy.
At Benefit Resource, we hear from participants every day that really need and count on these accounts, but Congress needs to hear your stories, too. The Employers Council on Flexible Compensation (ECFC) has recently launched the My Money, My Health site to help you share your stories and encourage Congress to eliminate employee FSA and HSA contributions from the value of health benefits for the calculation of the Cadillac Tax.