As a final entry in our excise tax series, we wanted to share an analysis that shows why the excise tax has been, from the beginning, the provision of the ACA that has caused employers the most heartburn — and why it will take creative strategies like those described in the Excise Tax Survival Kit to avoid it in 2018 and beyond.
In earlier posts, we’ve demonstrated that health plan costs vary widely by geographic region and workforce demographics (as plan sponsors know all too well), and argued that the excise tax will put undue burden on employers in higher-cost areas of the country and on those with less-healthy workforce populations. Based on premium costs provided in Mercer’s 2014 National Survey of Employer-Sponsored Health Plans, we’ve estimated that a third of large employers (those with 500 or more employees) have at least one plan whose cost will exceed the excise tax threshold in 2018 if they make no changes. Because of the way the excise tax threshold is indexed, the percentage of employers at risk will rise every year that medical inflation exceeds the general CPI — which, based on past history, is every year. So no employer can afford to be cavalier about the tax.
But what do these high-cost plans look like? Are they really the overly rich plans that economists argue have led to inefficient usage of medical services and increased health costs?
It depends on how you define “overly rich.” It makes sense that the richest plan on the public exchange — the “Platinum” plan — would be the type of plan targeted by the excise tax. But, taking a deeper dive into our survey data, we find that fewer than a third of those employer-sponsored plans estimated to exceed the excise tax in 2018 have an actuarial value (AV) of 90% or higher, the definition of a Platinum plan. So are Gold plans considered excessive as well? About half of the high-cost plans in our analysis have a Gold level AV of 80%. But 15% are Silver level plans (AV of 70%), and 7% are actually Bronze (AV below 70%).
On the public exchanges, Silver plans are the marketplace standard, accounting for 68% of enrollment as of June.1 These plans are also the basis for determining cost-sharing reduction subsidies on the exchanges, and yet, under employer-sponsored coverage, many of these same plans will be deemed “high cost” and subject to the excise tax.
A recent release from the Council of Economic Advisers Chairman Jason Furman argues that the “very high thresholds” of the excise tax will ensure that the tax applies only to those very rich “Cadillac” plans and not “typical ‘Chevy’ plans.” But it’s not just the Platinum or Gold level plans that will be impacted; even some Bronze level plans are at risk for exceeding the tax threshold in 2018. Forget Chevy, you could be paying out for your ’96 Geo!
In our comments to the Treasury Department, we suggested that focusing solely on cost as a measure of health plan value may unfairly tax some groups, and that actuarial value might be a more fair measure. We won’t know whether the provision will be revised until 2016 at the earliest. Given that, our advice to employers is to carefully consider the strategies with the potential both to position you for long-term cost management and strengthen your value proposition. That way, you’ll come out ahead whatever the outcome of this debate.
Emily Ferreira assisted with data analysis and the preparation of this post.
1 Kaiser Family Foundation analysis of June 30, 2015 Effectuated Enrollment Snapshot, Centers for Medicaid and Medicare Services (CMS), accessed September 8, 2015.
As employers look for ways to address their potential exposure to the excise tax, many have turned to high-deductible health plans as a way to create employees who are better “shoppers” for health care.
In some cases, the employer will help to mitigate the higher deductible by making a contribution to a health savings account (HSA), which is problematic in 2018 since HSA contributions are counted in the excise tax calculation, or by offering accident/critical care coverages. However, emerging experience is showing that in many cases, employees are underutilizing HSAs or are not electing the critical care coverage when they might benefit from it. Too many employees are one high-deductible event away from wiping out any savings that they have, and then some. On the other hand, some employees buy a higher level of medical coverage than they need, tying up money that might be better allocated to a 401(k) plan to build retirement savings.
We are now at a point where it is incumbent upon employers to engage their employees in health care and other benefit enrollment decisions in a way that actually results in employees’ electing the suite of benefits best aligned with their needs. Employees are overwhelmingly reporting that increases in their medical plan costs are obstructing their ability to save — not just for retirement, but for everything else. If employers are going to reduce excise tax exposure and continue to have productive, healthy employees, they need to find ways to better curate the benefits experience so that their employees are able to more easily elect the combination of programs that best support them, where they are.
Employers that look beyond the averages of their workforce and delve into segment-specific needs can achieve benefit utilization that is better aligned with each individual’s needs. It doesn’t need to be intrusive — you don’t have to mine all available data on the financial and/or health situation of each employee. It just means recognizing that different segments of the workforce need different types of support. And, if an employer is willing to be more directive in order to build engagement with the programs offered, employees will be able to make better choices. At the very least, some of the friction of decision making will be eliminated.
Employers looking to control health costs and reduce excise-tax exposure face a dizzying array of levers to try. Cost shifting, consumerism, workforce health improvement … and now, accountable care organizations (ACOs). Where do ACOs fit in?
ACOs hold great promise. By changing the provider reimbursement structure to reward value instead of volume, and by providing delivery systems with resources and tools to better manage and coordinate care, they aim to deliver the right care with the right provider in the right setting. The health care system is fraught with waste and inefficiency, and ACOs look to curb that waste while improving quality outcomes. In the best-case scenario, an ACO could be a rare win-win for employers and workers.
But do all ACOs offer value? And what about the new fees that come along with them? ACO contracts typically include care-coordination fees to fund new clinical resources responsible for managing health care consumption and outcomes, along with new bonus payments for providers that meet quality and/or cost-control targets. Is the ROI sufficient to lower total health-care spend? How will these new fees be reflected in calculating plan costs for measuring excise tax liability?
Like most new innovations, results across ACOs are highly variable. In other words, if you’ve seen one ACO, you’ve seen one ACO. To understand how they can support your quest to avoid the excise tax, start by looking in your own backyard. Most national carriers have numerous ACO systems embedded in their PPO networks. Ask your carrier for detailed reporting on how many of your employees are accessing these systems. Ask what you are paying in fees and bonuses. Ask what types of savings you are achieving via these arrangements. Ask what type of growth they are anticipating in the prevalence of these arrangements in your key markets. Make sure that you are getting a favorable ROI, and, if you like what you see, explore ways to drive even more volume into these systems. And if you don’t like what you see, ask your carrier how they are addressing underperformance.
2018 is right around the corner. Will ACOs be the lever you pull to avoid the excise tax? They are certainly worth a close look.
A question relating to last week’s posts about managing health savings accounts (HSAs) after the excise tax goes into effect prompted an interesting discussion among the authors (and their go-to compliance expert) about the pros and cons of continuing to offer employees the opportunity to make pre-tax payroll HSA contributions. We thought we’d share it in Q&A form so you can follow along. Warning — it gets a little complicated, but that’s the nature of the beast. Welcome to our world.
Dee (an astute reader): The vast majority of employers that offer HSA-qualified high-deductible health plans (HDHPs) offer the ability for employees to make pre-tax payroll HSA contributions and even encourage them to do so. For now, such contributions count towards the calculation of the gross cost of “high cost” health coverage for excise tax purposes. Should employers take away the pre-tax payroll HSA contribution feature from their cafeteria plans? Otherwise, an HDHP with a lower gross cost than a traditional PPO plan may actually end up triggering a greater excise tax because any employee pre-tax payroll HSA contributions would get tacked on to the total cost of the employer’s health coverage.
Joe K. (author of Managing FSAs to Avoid the Excise Tax): First, how confident are we that employee pre-tax payroll HSA funding will count toward the excise tax? Can employers hold out hope they won’t need to make a change?
Dorian (compliance expert): We won’t know for sure until we receive formal regulations next year. However, our current understanding based on the existing legislation, as well the proposed position that the IRS telegraphed in their “pre-guidance” issued earlier this year, is that employee pre-tax payroll HSA funding will count toward the excise tax.
Jay (author of Health Savings Accounts and the ACA): I would advise a plan sponsor to consider a hybrid approach — continue permitting (or making) pre-tax payroll HSA contributions up to the excise threshold, at which point any remaining allowable HSA contributions are made post-tax. For the employee’s convenience, the employer would facilitate employees’ post-tax HSA contributions via payroll.
Joe B. (author of The Unlimited Possibilities of the Limited-Purpose FSA): Well, ideally we want to optimize. But it seems to me to be more complex to have both pre- and post-tax HSA payroll contributions, rather than just going all post-tax with the employee claiming an above-the-line deduction for the entire HSA contribution when filing federal and state tax returns. I realize there is a little efficiency and tax savings lost, but that needs to be weighed against administration and communication considerations. Further, the employer could make a contribution when cost is within the thresholds, and let the employee contributions go post-tax.
Jay: Either a hybrid model or the seemingly simple move from pre- to post-tax brings administrative and communication considerations. Meanwhile, the efficiency opportunity could be substantial for the employer and warrant a hybrid model. I’d not likely recommend that an employer drop employee pre-tax payroll HSA contributions entirely unless the payroll/admin modifications were going to absorb at least half the current-year tax savings.
Joe B.: Good point. And now that I think about it, it’s really not any different than what some 401(k) plans do. If I elect to contribute more than the tax-favored limit, I can click a box to have the excess amounts contributed on an after-tax basis.
Joe K.: Although in some situations the tax savings just won’t be that high. We can estimate based on employer-specific data, such as the current level of employee funding and employee pay relative to the FICA limit.
Dorian: Keep in mind that if you don’t allow pre-tax payroll contributions through a cafeteria plan, you must meet the rigid, and often unworkable, HSA comparability rules for employer HSA contributions — which are especially problematic where an employer provides matching HSA contributions or HSA contributions based on wellness activities. Avoiding the comparability rules is one of the substantial benefits of allowing employee pre-tax payroll HSA contributions.
Joe K.: Some employers provide the same HSA funding to all employees. However, it sounds like eliminating an employee’s ability to make pre-tax payroll HSA contributions can be very limiting.
Dorian: It can be. To meet the comparability requirement, an employer generally needs to offer specified classes of “comparable participating employees” the same level of HSA funding. That not only effectively prevents an employer from using an HSA for wellness incentives, it may also mean the employer can’t vary HSA funding by salary band (certain exceptions apply). And there are other requirements as well, so if you do plan to meet the comparability rules, you’ll want to take a close look at all of the associated provisions.
Jay: Can an employer avoid these comparability rules if employees can partially fund their HSA on a pre-tax basis? If so, it sounds like another reason to consider a hybrid model.
Dorian: Possibly, but the law is not clear. We need to continue monitoring developments in this area.
Since the ACA elevated the topic of health care coverage to mainstream media, savvy employers have taken this opportunity to begin or expand their own health care conversations with employees. The impending excise tax on high-cost plans offers employers yet another opportunity to tap into the heightened attention the media has placed on the cost of health care in the US and translate what that means to their employees.
While many employers have used the introduction of the ACA in general, and the excise tax in particular, to educate their employees regarding the true cost of the coverage they provide, some have broadened that conversation to include the value of the overall package they deliver — their employee value proposition. And they’re doing so in increasingly creative ways.
The right combination of pay, benefits, career opportunities, and work/life balance are critical elements in the employee value proposition. However, the key to making each of these come to life is in how they help employees answer the “what’s in it for me?” question. Some employers are tapping into social media in the workplace and using internal discussion forums, executive and leadership blogs, along with public social media such as Twitter to share messages and start two-way conversations. Others are targeting and segmenting messaging online and in print, while still others are delivering digital on-demand personalized information. Most employers have moved from one-way, once-a-year communication to employees to create a multi-layered marketing approach that includes varied touch points throughout an employee’s career.
When you’re thinking about what to say to your employees about the excise tax, think about how to make it into a message about the value proposition. And then consider finding a new way to deliver it — because the medium itself can reinforce the message. Personalized information says “you matter.” Two-way communication says “we’re listening.”
As any HR professional knows, managing a total rewards program is a complex balancing act. How do you find the right combination of pay, benefits, career opportunities, and work/life balance to enhance the employee value proposition — the reason the people you want choose to work for you rather than another employer? And while you focus on internal imperatives like retention and maximizing productivity and performance, you must also be continually aware of external factors that can change the equation.
The excise tax on high-cost health plans is one such factor. In general, it is causing many employers with generous — and even not-so-generous — health plans to think about scaling them back. While it might seem to be just a benefits issue, it’s a great opportunity to step back and take a look at the entire rewards program. Companies that have to cut benefits because of the excise tax may not want to keep the money themselves. What’s the best thing to do with those dollars? If you push it into pay, how? Who gets it? Everyone? That might seem the obvious solution, but what’s the impact on other compensation structures in place? Can you enhance the benefit package to replace the lost value of the health plan with another tax-efficient offering? What if you put the money into training and development? Do you need to focus on attraction or retention?
You also need to look ahead five years or so because trends that are gaining momentum will change the employment landscape. We’re moving toward a bifurcated workforce of core vs on-demand employees. That means organizations will focus more on their own employees, while their contractors, freelancers, and temporaries will have to manage their own employee value proposition (think Uber drivers). And, as employees have greater accountability for managing their own careers and their own finances, we’re moving towards more individualized rewards and “do-it-yourself” benefits, where employees will need financial savvy to make good health care selection and 401(k) savings decisions to be ready for retirement.
Because young employees continually ask themselves “is this the best place for me to work,” employers must continually nurture, adjust, and reenergize the value proposition. The excise tax has come along at a time when deep, structural changes are also challenging us to reassess the impact of what we offer our employees.
If you haven’t yet stopped to consider whether your total rewards program will serve your organization’s needs five years from now, the excise tax might be just the nudge you need.
The looming excise tax is getting a lot of attention from employers — as it should. Based on their current plan costs, about one-third of employers are likely to become subject to the excise tax in 2018 when it first goes into effect, with many to follow in subsequent years. Without assertive action, it’s not a question of “if” plans will become subject to the excise tax, but “when.”
With a nondeductible tax of 40% applicable to plan costs above threshold amounts that generally start at $10,200 for single coverage and $27,500 for family coverage in 2018, the tax could have a significant impact on employers and their plan members.
Fortunately there are a number of strategies employers can use to mitigate excise tax exposure. One highly effective strategy is to introduce a private exchange such as Mercer Marketplace™. Employer experience with Mercer Marketplace since 2014 shows clearly how it can help minimize excise tax risk.
About 60% of employees choose lower-cost consumer-directed health plans on Mercer Marketplace. These plans cost less than traditional PPOs and increase at a slower rate than the overall health plan market. Growth in enrollment in CDHPs reduces the number of employees enrolled in more expensive plans that will be subject to the tax. Outside of Mercer Marketplace, however, achieving high CDHP enrollment has been a challenge. Mercer’s most recent survey of employer-sponsored health plans found that only about 25% of employees choose to enroll in the CDHP. One reason that Mercer Marketplace members are more likely to select a CDHP is that our platform transforms the enrollment experience into a consumer purchasing experience offering decision-support tools that help people figure out how much insurance they really need.
On Mercer Marketplace, year-over year costs from 2014 to 2015 rose by an average of 1.5%, without plan changes. This compares to an overall average market increase of 4.6% — after employers made plan changes worth 2%–3% of plan cost.
The combination of strong enrollment in lower-cost plans and overall plan cost increases below the market average make the Mercer Marketplace private exchange a strong strategy to consider for many reasons — and certainly for excise tax risk mitigation.
As inflation and rising health care costs continue to erode the value of an employer’s benefits dollar, cost-effective consumer-directed health plans (CDHPs) are gaining in popularity. In fact, Mercer’s most recent National Survey of Employer-Sponsored Health Plans found that 66% of large employers expect to offer a CDHP by 2017. But while CDHPs can help an employer align its benefits strategy to the ACA and remain under the excise tax cap, they expose employees to wider gaps in coverage and higher out-of pocket expenses.
The impact on employees is magnified because personal savings are at an all-time low. When an unexpected health event occurs, many employees lack adequate savings to pay the out-of-pocket expenses. In a recent Mercer survey, 39% of US employees enrolled in company health plans said that their out-of-pockets costs were either “not affordable” or “not easily affordable.” When asked to think ahead five years, 59% of employees foresee having difficulty with out-of-pocket health care costs.
To help buffer the impact on employees and accelerate CDHP adoption, employers are turning to a specific set of voluntary benefits — accident, critical illness, and hospital indemnity — that can be used to fill gaps in CDHP coverage and reduce cost exposure.
Here are just a few ways that these supplemental health voluntary benefits help employees:
- A set amount is paid directly to the employee, independent of any other insurance coverage. The payment can be used by the employee to cover health- or nonhealth-related expenses.
- Supplemental health coverage can be tailored to include additional wellness benefits and extended to include dependents.
- Premiums are typically group-discounted and can be billed via payroll deduction.
And post-tax voluntary benefits aren’t counted in the excise tax calculation. That means that while these supplemental health benefits can be of material help to your employees, they won’t derail your excise tax avoidance strategy.
In fact, voluntary benefits can have a role to play in many HR challenges: talent retention, employee financial wellness, unique executive risks, addressing the needs of a multi-generational workforce … the list goes on. If you’re thinking about pairing voluntary benefits with a CDHP, you might think about these other opportunities as well.
In their post (“Managing FSAs to Avoid the Excise Tax”), my colleagues Joe Kra and Alayna Kotlyar broke the bad news that, under the ACA’s excise tax rules, FSA contributions will count in the calculation of “cost” for purposes of determining any tax owed. They also pointed out the value of the limited-purpose (dental/vision only) FSA in a post-2017 world. I’d like to elaborate on that point here.
IRS Notice 2015-16, released in February, offers the possibility that stand-alone dental and vision plans, even if self-funded, may be exempt from the excise tax. Based on this pre-guidance, it stands to reason that a dental/vision-only FSA may also be exempt. Of course, we are all anxiously awaiting more definitive guidance, but assuming that limited-purpose FSAs are exempt, they present several possibilities. (Maybe not “unlimited” possibilities, as the headline suggests, but hey, it made you look!)
Regardless of the type of medical plan offered, when the underlying medical plan plus maximum contributions to a traditional FSA exceed the excise tax thresholds, a dental/vision-only FSA can be a powerful alternative. Dental and vision expenses not reimbursed directly by dental or vision insurance are often a significant way in which FSAs are used today. This value can be preserved.
In addition, a key long-term strategy for many employers to delay or reduce the impact of the excise tax will be to expand the use of high-deductible health plans (HDHPs), which generally have a lower cost than traditional plans. When an employer pairs an HDHP with a dental/vision-only FSA, exempt from the excise tax, they are taking a significant step toward optimizing the value of the benefit program.
Here’s an example of what I mean by “optimizing value.” As the underlying cost of a HDHP approaches the excise tax thresholds, employee contributions to the HSAs may need to convert to an after-tax basis, or be made outside of the employer purview, with a tax deduction taken on the employee’s income tax filing, in order to preserve as much of the tax advantage as possible. At this point the employer can continue to offer a powerful tax-advantaged benefit in the form of a dental/vision FSA. This offering will be particularly valuable to employees looking to maximize their long-term tax-effective savings through an HSA, while at the same time seeking short-term tax-effective funding for things like braces for their children.
The excise tax creates complexities. But employers who are willing to take the time to navigate through these complexities will find ways to add more value to their employees and gain a competitive advantage.
The ACA’s 40% excise tax will apply to “high cost employer-sponsored health coverage” as of 2018. “High cost” is defined as $10,200 for single coverage and $27,500 for family coverage. That seems fairly straightforward — until you take into account that the tax is calculated based on the “aggregate cost” of applicable employer-sponsored coverage over the threshold, not just medical premiums.
Health account funding is one of the components that must be considered when determining exposure to the excise tax. This includes:
- Health Flexible Spending Accounts (FSAs).
- Health Reimbursement Accounts (HRAs).
- Employer contributions to a Health Savings Account (HSA).
- Employee pre-tax contributions to an HSA.
Dependent care FSAs and employee funding to an HSA outside of an employer’s health plan are not considered when projecting exposure to the excise tax.
We expect that the exposure may be measured at an employee level. For example, if the cost of single coverage for a medical plan is $9,000 and an employee elects to contribute $2,000 to a health FSA, then the aggregate cost for that employee would be $11,000 ($9,000 plus $2,000). The excise tax for that employee would be $320 ($11,000 minus $10,200, multiplied by 40%). This calculation does not consider the average FSA contribution for other employees may be lower than $2,000.
The following table outlines several strategies to mitigate an employer’s excise tax exposure from a health FSA:
|Limit FSA contributions.||The maximum FSA contribution limit is $2,550 for 2015 and is indexed annually. An employer can reduce the maximum allowed based on the gap between the excise tax thresholds and the employer’s highest-cost medical plan.||
Benefit: Employees can continue to contribute to traditional FSA.
Drawbacks: Maximum funding is decreased and the employer will need to revisit the maximum annually.
|Vary FSA account funding by medical plan option.||Similar to the above, but allow additional FSA funding for plans with lower medical plan costs.||
Benefit: Allows additional FSA funding for enrollees in lower cost plans; can help encourage migration to less costly plans.
Drawback: Cumbersome to administer.
|Change FSA so it doesn’t count against excise tax threshold.||Implement a limited purpose FSA that can only be used for dental and vision.||
Benefit: Allows maximum funding to FSA. FSA funds are often accessed for dental and vision expenses.
Drawback: FSA cannot be used for medical expenses.
|Eliminate the FSA.||Removal of the account.||
Benefit: Employees may have opportunity to fund an HSA if enrolled in a qualified HDHP.
Drawback: Employees lose access to a valued tax benefit
If you offer an FSA, you should consider possible changes prior to open enrollment for the 2017 plan year. An employee may adjust their FSA election in 2017 if he or she is aware the FSA will change in 2018. For example, if an employer allows funds to roll over to the next year but won’t allow new funding in 2018, an employee may elect a higher FSA amount for 2017 to help cover expenses in 2018. On the other hand, if an employer plans to offer an HSA-qualified plan in 2018, an employee may choose to contribute less in 2017 so that their balance is depleted prior to the end of the year. If an employer allows an FSA roll-over, remaining FSA funds can disqualify an employee from opening an HSA as of January in the following year.
While we are still waiting for regulatory guidance that may influence the considerations and options described above, it’s not too early to start planning.
One of the more prevalent employer strategies to avoid the excise tax is to offer an account-based, consumer-directed health plan (CDHP), structured to coordinate with a health reimbursement arrangement (HRA) or health savings account (HSA). These plans generally cost less than traditional medical plans of comparable value, and nearly two-thirds of all large employers and about one-third of small employers already offer or say they expect to offer a CDHP within three years.
Despite their growing importance, a key consideration related to HSA-compatible plans hasn’t yet received much attention. These plans can allow participants to enjoy a greater level of tax-protected benefit than a traditional plan of equal cost because the protection can extend beyond the excise tax cost threshold. Here’s how.
HSA-compatible CDHPs permit both the employer and employee to contribute to the employee’s account, up to the statutory limits. These limits are indexed annually. For 2016 they are:
- $3,350 for single coverage.
- $6,750 for family coverage.
Funds deposited in an HSA enjoy unique “triple tax-protected” treatment under the Internal Revenue Code. Specifically, contributions are tax-deductible, earnings are tax-free, and distributions used to pay for qualifying health care expenses are tax-free as well. Contributions can be made on a pre-tax basis thru payroll via an employer’s cafeteria plan, or by depositing post-tax funds. In the former case, both employer and employee contributions count toward the excise threshold; in the latter case they don’t, and the HSA owner is permitted to take a tax deduction when filing his or her federal (and in most cases, state) income tax return.
So, what does this have to do with the excise tax? Well, assume an employer offers two plans:
- A traditional PPO with a cost of $10,200 for single coverage.
- An HSA-based CDHP to which the employer contributes $500 for single coverage, and whose cost excluding the employer contribution is $9,700 such that the total cost is also $10,200.
In this case, the traditional PPO allows the employer to deliver — and the participant to receive — $10,200 of tax-free health benefit. Alternatively, the HSA-based option allows the employer to deliver the same benefit, but permits the participant to tax-shelter substantially more thru post-tax, tax-deductible HSA contributions.
Specifically, assuming the 2018 HSA contribution limits are no greater than those for 2016, the availability of post-tax HSA contributions, which are deductible on individual tax returns, effectively increases the thresholds at which the excise tax becomes a consideration to:
- $13,550 for those with single coverage ($10,200 plus the $3,350 statutory HSA contribution limit).
- $34,250 for those with family coverage ($27,500 plus the $6,750 statutory HSA contribution limit).
These figures are likely conservative, since the HSA contribution limits will almost certainly be higher in 2018 than 2016. Further, they don’t contemplate the additional $1,000 catch-up contribution available to HSA-eligible participants ages 55+. Regardless, the ability to contribute and deduct post-tax funds to an HSA increases the 2018 thresholds at which the excise tax becomes a consideration by at least 32% and 24% for single and family coverage, respectively. This dynamic is only achievable using an HSA-compatible plan; no other medical plan offers this feature.
The growth of HSA-compatible plans has been driven by their ability to contain cost and engage participants, and the fast-approaching excise tax on high-cost plans has only accelerated that trend. The availability of tax-deductible post-tax contributions that don’t accrue toward the excise tax thresholds offers yet another reason for employers to consider implementing these plans. If you already have an HSA strategy in place, you might want to rethink how you position your plans as the cost approaches the excise tax threshold levels. If employees understand the tax advantages, they may be more inclined to select the HSA-compatible plan in 2018, or beyond.