Benefits

The Cadillac tax is a joke, right?!

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Author:

Eric Krieg

Eric Krieg

Eric Krieg is an industry disruptor with 30 years of experience in employee benefits brokerage and consulting. He informs employers and the media on how the employee benefits industry really operates. Krieg has served on national advisory boards for Aetna, United HealthCare, CIGNA and Guardian, as well as regional groups for Anthem, Kaiser Permanente and Medical Mutual. He began his career at Aetna and later served as senior vice president and group benefits business leader for one of the nation’s largest independent insurance brokerage and risk management firms. In 2014, Krieg launched the industry’s first benefits advisory services practice of its kind at Risk International, an independent risk and benefits management firm. Skilled in TCOR (total cost of risk) methodologies, he advises employers on LEAN benefits management techniques. Since 2011, Krieg has presented at conferences, seminars and webinars on various topics, including the ACA, wellness and health exchanges/marketplaces. A graduate of the University of Toledo, his professional designations include GBA, ChFC and CLU.

Eric Krieg

No — the acceptance of our healthcare costs is the real joke! Unfortunately people are missing the point that the tax hits only after you have exceeded $10,200 for an individual and $27,500 for a family in annual cost.

Where is the outrage regarding these types of costs for healthcare? Who can possibly rationalize that anyone should be spending that sort of money for health insurance coverage? Why aren’t people taking a line from the movie Network, and rising up and shouting: “I am mad as hell and I am not going to take it anymore.”

The solution for this is staring us right between the eyes. Like every other product or service in a free market society we must attack cost and quality. Stop fussing around with trying to change employees’ behavior (they’re not gonna do it). The tools and resources now exist to transform healthcare and force competitive market pressure on the system that will create better cost and quality for all.

Unfortunately, here’s what our leaders are focusing on:

  • The Republicans blindly just want nothing to do with the Affordable Care Act and have not put forth any reasonable alternatives.
  • Hillary Clinton now is jumping on the “repeal the Cadillac tax” bandwagon.
  • Then, of course, there are those in corporate America working diligently to manage costs who just want to make sure they stay within the targeted benchmarks, which simply means they will be like everyone else and pay too much.

Healthcare costs are like a slow drip and are one of the key reasons for such a slow economic recovery. We, as a country, cannot afford to spend so much money on healthcare – currently 17.1 percent of gross domestic product. This is robbing employees from much needed wage increases, eroding family households’ disposable income and redirecting corporate resources away from expenditures that could make their business more successful.

Rather than worry about a tax you might not have to pay, when was the last time you changed your approach to healthcare spending? That’s where I’d suggest any employer start on a quest to save money and still do right by their employees, like the business in this case study.

In other words, the Cadillac tax isn’t the problem, but your employee benefits plan might be.

 

  1. From the World Bank 2013, as compared to Germany @ 11.3%, Canada 10.9%, China 5.6% and of course there are two in the range of the U.S., Marshall Islands @ 16.5% (population 52,634) and Tuvalu 19.7% (population 9,876).

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