Healthcare “Cadillac Tax” Delayed until 2022
The recent government funding bill included a provision to further delay the Cadillac Tax. The tax is a 40% excise tax on plans with value over certain indexed thresholds.
The stopgap funding bill also amends other tax provisions that were part of the Affordable Care Act, such delaying the medical device tax—a 2.3 percent tax on the sale of certain devices—until 2020. In addition, the bill would extend the Children’s Health Insurance Program (CHIP) for six additional years.
The annual limits are as follows:
- $10,200 for individual coverage ($11,850 for qualified retirees and those in high-risk professions).
- $27,500 for family coverage ($30,950 for qualified retirees and those in high-risk professions).
These limits are indexed to the Consumer Price Index and may be increased for inflation. The tax is now deductible as a business expense.
The provider of health coverage must pay the excise tax:
- For self-funded plans, the employer plan sponsor is responsible for payment.
- For fully insured plans, the insurance carriers are responsible for paying the tax, which would likely be passed on to covered individuals in the form of higher premiums.