The Cadillac tax, the 40% excise tax on some health plans under the ACA, is still rolling along. As such, employers may want to take steps to avoid the tax which, as of now, will apply beginning in 2020.
The AHCA currently being debated in Congress repeals many of the ACA taxes. Importantly, it does not repeal the Cadillac tax instead deferring it to 2026. And neither does the just released Senate bill, the Better Care Reconciliation Act of 2017, which delays the tax until 2026.
Plans subject to the tax in 2020 will be those that cost more than $10,800 for individuals and $29,100 for families. The Cadillac tax was initially projected to affect 3% of health plans. Recent estimates project that it will hit 47% of plans by 2020.
Assuming that the tax will be enforced in 2020 gives employers a rather short timeline to make plan changes to avoid the tax. If employers want to ease the impact of significant changes to their benefits they have only one or two renewal cycles to do so. Some employers are already increasing deductibles or out-of-pocket limits to reduce premiums to avoid the tax.
NAHU has developed an infographic that outlines the concerns with the Cadillac tax.
IRS information on the ACA tax provisions including the Cadillac tax can be found here.
The Congressional Budget Office discussion of private health insurance premiums and federal policy referenced in NAHU’s infographic is here.
Compliance Cornered’s previous post on this topic is here.