Companies worried that on-site clinics will get slammed by Cadillac tax

Dive Brief:

Employers have been investing in on-site clinics as a way to improve employee health and reduce healthcare costs. But rules surrounding whether Cadillac tax calculations will include these clinics remains unclear.
Last February, the IRS released a notice suggesting the cost of care received through on-site clinics would have to be counted in the ACA’s excise tax calculations, reports Employee Benefit News. But many employers say what they are actually doing with their on-site clinics doesn’t match the concerns of the IRS.
According to a survey by Mercer, which partly specializes in on-site clinics, 46% -- near half – of all employers with a general medical clinic are unsure how their clinics will affect their Cadillac tax calculations, reports Employee Benefit News.

Dive Insight:

Mercer’s National Survey of Employer-Sponsored Health Plans from last year found that 29% of employers with 5,000 or more employees provided an on-site or near-site clinic offering primary care services, up from 24% in the prior year.

The main question is whether these on-site clinics count as a benefit program or as a medical setting.

“[The federal government is] not going to be taxing physician offices. They're not taxing hospital or urgent care settings, or retail clinics, and these on-site centers provide very much the same kind of services,” Larry Boress, president and CEO of the Midwest Business Group on Health (MBGH), told Employee Benefits News.

The MBGH has urged the IRS to exclude services provided at on-site and near-site clinics from “applicable coverage” under the Cadillac tax. The IRS said it will exclude clinics that offer “de minimis” coverage, but MBGH says the definition of “de minimis” needs to be broadened, reports Employee Benefit News.

Many companies see their on-site health clinics as a way for their employees to manage health risks and chronic conditions and keep general healthcare costs down– but many are also equally uncertain of how to measure return-on-investment. Employee Benefit News suggests “due diligence” when designing an on-site clinic plan and to be certain to consider which pain points your clinic seeks to address so you don’t get duped by vendors.