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Delayed Again . . . Cadillac Tax Postponed Until 2022

01/25/18

  06:45:00 pm, by MedBen5   , 255 words,  
Categories: News, Health Care Reform, Taxes, IRS

Delayed Again . . . Cadillac Tax Postponed Until 2022

IRS Building

While things have been relatively quiet on the Affordable Care Act front, in recent weeks employers were starting to wonder if they needed to implement strategies to manage costs under the controversial Cadillac Tax which was set to become effective in 2020.

This week’s short-term budget bill put those concerns to rest for a couple more years. The bill that passed out of Congress and was signed by President Trump on January 22 included another delay of the Cadillac Tax – now postponed until 2022.

The biggest problem with planning for the Cadillac Tax is that there are still no implementing regulations. That means that there is no definitive guidance for plan sponsors who want to determine how this tax might affect them. In its current form, the Cadillac tax would assess a 40% penalty on health plans in excess of certain thresholds. Those thresholds, set in 2014 at $10,200 for single coverage or $27,500 for family coverage, increase each year thereafter by statute.

One important fact to remember is that, for Cadillac Tax purposes, the value of a health care plan is determined not just by what the plan offers, but by the overall costs of the plan, which is calculated using the same methodology as used in determining a plan’s annual COBRA rates. So simply removing a benefit here and there will not significantly affect the coverage cost in relation to the threshold amount if the overall plan costs are not affected.

For more information about the Cadillac Tax, contact Vice President of Compliance Caroline Compliance Caroline Fraker at 800-851-0907 or cfraker@medben.com.

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