Cadillac Tax Delayed for Two Years

Cadillac Tax Delayed for Two Years

The following information was received from our partner, Cigna, on 12/18/15. We have added emphasis and adjusted the look for easier understanding for our readers.

Today, Congress passed a two-year delay of the 40 percent excise tax on high-cost employer-sponsored health plans, also known as the “Cadillac Tax.” This delay was part of a year-end tax extender and government funding package, the Consolidated Appropriations Act, 2016, known as the “Omnibus.” President Obama is expected to sign these changes into law.

The Omnibus includes several key changes pertaining to the Affordable Care Act:

Excise Tax

  • Implementation of the 40 percent excise tax is delayed from 2018 to 2020.
    • While the tax was originally non-tax deductible, the Omnibus changes that treatment and makes the tax deductible.40 percent excise tax cadillac tax
  • The 40 percent excise tax applies to the cost of employer health plan coverage exceeding certain threshold amounts,
    • Originally set for 2018 at $10,200 for individuals or $27,500 for families.
    • These thresholds are indexed and will be higher on the delayed effective date in 2020.
    • The Omnibus also calls for a study on how to determine adjustments to these thresholds to reflect age and gender differences between businesses.
  • Many employers, unions, insurers and industry groups have opposed the tax based on concerns around administrative and financial burdens for employers and adverse outcomes for employees.
  • The delay allows the government additional time to propose regulations.
  • The delay also provides opportunity for stakeholders to provide comments, as well as prepare their long-term health benefits strategies.

Health Insurance Industry Fee (a.k.a. Health Insurer Tax)

HEALTH INSURANCE INDUSTRY FEE

Additional Information Regarding the Cadillac Tax

For additional information on the Cadillac Tax, please see our previous Blog Second 40% Excise Tax (“Cadillac Tax”) Notice Issued

Questions? Let’s Talk.

The Employee Benefits Experts at FosterThomas HR are here to help with any questions you might have regarding the Affordable Care Act. We will be monitoring this bill to see how it may affect our clients. We invite you to bookmark our HR Blog to ensure that you don’t miss out on any important updates.

CONTACT FOSTERTHOMAS HR

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FosterThomas is a leading professional services company that provides solutions in the areas of Human Resources Consulting and Outsourcing, HR Staffing, Outsourced Recruiting, Employee Benefits Brokerage, Payroll Implementation and Services, HR for Government Contractors, Business Insurance, HR Compliance and Risk Management. We help organizations by providing solutions designed with a focus on cost containment strategies and increasing HR efficiency. FosterThomas HR Consulting was established in 1993 with offices in Annapolis, Maryland (Corporate), McLean, Virginia and Raleigh, North Carolina. Today, FosterThomas occupies a unique position as a full service provider of HR services.

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