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Making Workers Pay as the Cadillac Tax Looms

To trim costs, more companies are offering health-savings accounts

Companies seeking to rein in medical spending and worried about the “Cadillac tax” on expensive health insurance expected in 2018 are turning to coverage that shifts more costs to workers. As an alternative to traditional insurance, businesses are offering health-savings accounts, or HSAs, which let workers set aside funds to pay medical bills. These are paired with insurance coverage with a high deductible—at least $2,400 per year for a family—that typically must be spent before insurance kicks in to pay claims.

Employers see HSAs as a way to hold down costs and prepare for changes in health-care law, says Helen Darling, president of the National Business Group on Health, an association of big companies. The health reform bill signed by President Obama last year will apply a 40 percent levy on health benefits above $27,500 for families. The only way to avoid “the Cadillac tax is if they control costs starting now,” Darling says.