An excise tax on generous employee health benefits, like the one proposed in the Senate's version of healthcare reform, would spur many companies to downsize their health plans, according to a survey of 465 companies conducted by Mercer.

Sixty-three percent say they would reduce the cost of their healthcare packages to below the level that would trigger the excise tax, while 23% say they would share the cost of the tax with their employees. Another 7% say they would terminate their plan.

The Senate's healthcare reform measure would charge a non-deductible excise tax of 40% on annual costs of health coverage that exceed $8,500 for an employee-only plan and $23,000 for family coverage. Measured costs include the premiums paid for health, dental and vision plans by both the employer and employees. There are higher thresholds for retiree health coverage and some other special situations.

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