No room to stand

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By Robert H. Dobson | 30 September 2009

The idea of taxing so-called Cadillac plans may not sound unreasonable upon first glance. But an actuarial view quickly reveals that the high cost of these plans has as much to do with the characteristics of the covered population as it does with benefit richness. It also reveals that the method of determining the taxable benefit threshold may create unintended consequences—especially when coupled with other benefit-level requirements under various reform proposals, leaving little room between benefit floors and the ceiling in certain slices of the insurance market. Is there a better way to structure a ceiling for maximum benefits? One solution might entail better defining actuarial value and using the refined notion to address both the floor and the ceiling.