In addition, the ACA requires that the insurance employers offer must be “affordable.” If the cost of insurance rises above 9 1/2 percent of a family’s income, the employer can face a fine of $3,000.
One more measure coming down the pike — to take effect in 2018 — is the so-called “Cadillac tax” for excessively expensive plans. The thresholds for this tax are $10,200 per individual and $27,500 per family.
Kuelz remarked that Jefferson is nowhere near these amounts yet, but these totals bear watching, as health insurance costs for school districts have been rising at around 8 percent a year, far ahead of inflation.
He said that some planning will be required to keep Jefferson insurance costs down so they do not rise over this threshold by 2018. After that year, the Cadillac tax threshold will rise in accordance with the rate of inflation.
“One calculation we have been making for school districts is, they are asking, what if you gave the money directly to the employees and let them go on the exchange?” Kuelz said.
Using current figures, districts would incur more costs by giving the money to the employees directly, he explained. For starters, these districts would lose a tax break. Then they would be subject to penalties. In addition, any money given to employees to cover these costs would then be counted as taxable income, which opens a whole new can of worms for both the employer and the employees.
Right now, such a move would drive a district’s costs up significantly, Kuelz said. But this might change as costs go down on the exchange.