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All-out Attack on Healthcare Costs

CFOs are trying to get their annual cost increases below CPI in preparation for the 2018 excise tax.

By Susan Kelly | Updated on September 10, 2014
As the 2018 start of a federal excise tax on high-cost health coverage marches closer, companies are rolling out an arsenal of cost-containment approaches, ranging from changes in plan design and new reimbursement models to wellness initiatives and telemedicine.

The growth in healthcare costs has consistently outpaced inflation in recent years, so controlling them has always been an issue for companies. But the excise tax imposed by the Affordable Care Act “put a time clock on the issue of cost management for a lot of organizations,” said Randy Abbott, senior healthcare consultant at Towers Watson.

Starting in 2018, companies will pay a 40% excise tax on healthcare costs exceeding $10,200 for individual coverage and $27,500 for family coverage. In subsequent years, those thresholds will be indexed to a rate similar to the CPI.

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