Delayed Again but Not Repealed
The recent government funding bill included a provision to delay the Cadillac Tax further. 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 as delaying the medical device tax—a 2.3 percent tax on the sale of specific devices—until 2020. In addition, the bill would extend the Children’s Health Insurance Program (CHIP) for six additional years.
Review of the Cadillac Tax
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. Additionally, 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 through higher premiums.
Contact us to learn more about the Cadillac Tax and what it means for you!
