Large employers continue to launch worksite clinics despite ACA uncertainties

The percentage of large employers (those with more than 5,000 employees) that offer onsite or near-site worksite clinics offering primary care services grew from 24 percent in 2013 to 29 percent in 2014, according to consultant Mercer. In a recent targeted survey on worksite clinics, Mercer found that of the 134 respondents, 72 percent of those whose clinics provide general medical services said that managing employee health risk and chronic conditions is an important objective for the clinic.

For more than two-thirds of survey respondents (68 percent), improving access to care also was an important objective. As the Patient Protection and Affordable Care Act (ACA) expands health coverage to more Americans, primary care shortages in some parts of the U.S. could be exacerbated. Establishing a new clinic, or expanding an existing occupational health clinic to provide general medical services is one way employers can ensure that their employees—and in some cases employees’ dependents—will have access to quality care, noted Mercer.

Excise tax. While the ACA may have spurred employer interest in worksite clinics, IRS Notice 2015-17 has clouded the picture by suggesting that the cost of care received through the clinic must be counted in the ACA’s excise tax calculation.

The excise tax, otherwise known as the “Cadillac” tax found in Section 9001 of the ACA was created to act as a revenue offset provision to help pay for the cost of the law. Beginning in 2018, a non-deductible excise tax will be imposed on the cost of employer-sponsored health programs that exceed an aggregate value of $10,200 for individual employee-only coverage and $27,500 for family coverage. Each tax period, employers will be responsible for calculating the amount of excess benefit subject to the tax for any applicable employer-sponsored coverage offered to employees. The excise tax must be paid by the employer.

“Employers are definitely concerned that the operational costs of a worksite clinic could help push them over the threshold for the excise tax, although most remain convinced that the clinic will deliver positive net value,” says David Keyt, Principal, National Onsite Clinic Center of Excellence Leader.

While 15 percent of respondents believe their general medical clinic will hurt them in terms of the excise tax calculation, nearly as many (11 percent) believe it will help—presumably by helping to hold down the cost of the company’s health plan—and 28 percent believe it won’t have an impact either way, according to the study. However, 46 percent of respondents say they don’t know how the clinic will affect the calculation. Typically, the cost of the clinic accounts for 10 percent or less of their total health care spending, and for about half of the respondents, it accounts for 5 percent or less.


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