How Many Employers Could Be Affected by the High-Cost Plan Tax
We used information about the premiums for employer-sponsored health insurance from the 2018 Kaiser Employer Health Benefits Survey (EHBS) to estimate the percentage of employers that would have at least one health plan subject to the law. The EHBS is an annual survey that collects information on health benefits from more than 2,100 employers with three or more employees. This method is largely consistent with our earlier estimates.
The EHBS collects information from employers about their largest plan for up to four plan types — health maintenance organization (HMO), preferred provider organization (PPO), point of service plan (POS), and high deductible health plan offered with a savings option (HDHP/SO). An HDHP/SO is a plan with a single deductible of $1,000 or more offered with a health reimbursement arrangement (HRA), or a health plan that qualifies the employee to make contributions to a Health Saving Account (HSA). For HDHP/SOs, the amounts that employers contribute to employees’ HSAs or make available to employees through HRAs are also collected. The 2018 EHBS includes information on the percentage of employers who sponsor a flexible spending account (FSA) and the maximum amount that they allow employees to contribute. FSAs are tax-preferred accounts employers may establish for their employees, so they can use pre-tax dollars for some medical spending. While three-quarters of large employers (those with 200 or more workers) sponsor FSAs, the ACA placed limits on the maximum amount that an employee may contribute ($2,650 in 2018).
Since HRAs are notional accounts, employers are not required to actually transfer funds until an employee incurs expenses. Thus, employers may not expend the entire amount that they commit to make available to their employees through an HRA. We therefore counted half of an employers total HRA contribution towards the plans total cost.
For the estimates, we took the single premium for each health plan offered by responding employers and increased them by National Health Expenditure Accounts (Table 3) projections in the annual percent change in private health insurance. For HSA-qualified plans, we added the amount that employers contribute to employees’ HSAs to the premium. For high deductible health plans with a Health Reimbursement Arrangement (HRA), the survey collects information about the amounts employers make available to employees, but not the amounts that are actually contributed. To be conservative, we added one-half of the amounts that employers make available through the HRA to the plan premium. The HSA and HRA amounts were also increased by NHE projections. For employers that reported offering an FSA, we added the maximum contribution the firm allows adjusted for inflation to the estimated premium for each plan type except HSA-qualified plans. We did not add the FSA amount to the premium for HSA-qualified plans because generally a person cannot establish an HSA if they have an FSA that could reimburse expenses before the plan deductible is met. We used the maximum contribution amount because we were evaluating if the cost for the plan could exceed the threshold for an employee. We used the projections in the CBO’s “Options for Reducing the Deficit: 2019 to 2028” for the threshold in 2022 and then assumed it increased at the Congressional Budget Office’s 2019 projections of the Consumer Price Index, All Urban Consumers (CPI-U) (Table 2-3).