Cadillac Tax Update â€“ the tax that everyone loves to hate still slated for January 2020
The Cadillac Tax â€“ the tax that everyone loves to hate. But, what exactly is it? The Cadillac Tax is a 40% excise tax on annual medical, prescription drug, HSA, HRA, and FSA employer and employee contributions in excess of the following premium costs:
- $10,200 for single (or individual) coverage*
- $27,500 for all other coverages such as family, member/partner, and parent/child*
It was designed to provide revenue for the ACA individual coverage marketplace subsidies, and to encourage more affordable plans from insurers. There are still unknown variables regarding the tax, the most important being who will pay the tax â€“ employer, employee, or a combination of both.
Bear in mind, although Repeal & Replace has come and gone a few times, the Cadillac Tax was never removed from the equation, and seems as if it is here to stay. And as of this date, the ACA is still the law of the land.
The taxesâ€™ inception has been delayed twice, and unless it is delayed again, it is set to start in January of 2020. That may seem far off, however, two years will pass quickly. Since it is not realistic to believe it will cause zero disruption to your employeesâ€™ benefits, now is the time to assess your group insurance plan and make the necessary adjustments to minimize the impact the Cadillac Tax can have.
* â€śescalatorsâ€ť (inflation adjustments) for these figures are included in the law.
For more information regarding the Cadillac Tax, Employee Benefits for your organization, or to speak with one of our advisors, email Phyllis LoSapio Brown & Brown Benefit Advisors at email@example.com.