A few days ago, President Obama signed legislation delaying the Affordable Care Act’s “Cadillac tax” for two years. The tax on high cost health plans is now scheduled to go into effect in 2020. The provision delaying the excise tax was included in a year-end spending package passed by Congress a couple days earlier.
When implemented, employer-sponsored health plans that exceed a pre-determined threshold will be taxed at a rate of 40%. As if that weren’t bad enough, employers will be responsible for determining how much each vendor owes based on the percentage of the total cost their coverage represents—yes, it will be a lot of work, which is one of the reasons the National Association of Health Underwriters, a professional organization that JME participates in, has advocated for a total repeal of the tax.
For now, this is something employers don’t have to worry about, but if Congress begins to consider legislation that would modify or repeal the unpopular provision altogether, we may reach out to JME clients with a request that you contact your elected officials.
To learn more about the Cadillac tax as outlined in the Affordable Care Act, click here.