Delay to Cadillac Tax
On December 18, 2015, President Obama signed into law the Consolidated Appropriations Act, 2016, which includes a two-year delay in the implementation of the Affordable Care Act’s excise tax on high cost employer-sponsored health coverage — commonly referred to as the “Cadillac Tax.” The excise tax, which would have gone into effect in 2018, will now be delayed until 2020.
The excise tax is a 40 percent tax on the aggregate value of employer-sponsored health plan coverage that exceeds $10,200 for self-only coverage and $27,500 for family coverage. The tax, which applies to both insured and self-insured group health plans, will be imposed on insurance companies, employers and plan administrators depending on the type of arrangement involved.
After 2018, the thresholds are indexed for cost-of-living adjustments and may be increased to reflect the age and gender of the population covered, for retired non-Medicare eligible individuals between the ages of 55 and 64 and where the majority of the employees in the plan are engaged in certain high-risk professions.
In addition to changing the implementation date, the newly signed Act also makes the excise tax deductible against income taxes and requires that the Comptroller General of the United States study and report to Congress on the suitability of the benchmark to be used for the age and gender adjustment to the applicable dollar limits under the tax.
Source: CalChamber | 2015 © Copyright Payroll Masters
Payroll Masters is not a licensed insurance broker or agent and does not provide professional or legal advice. This document has been provided for informational purposes only and is not intended and should not be construed to constitute legal advice. Please contact your employment attorney in connection with any fact-specific situation in which you intend to take significant employment action. Readers agree that they will hold Payroll Masters in indemnity and Payroll Masters assumes no liability. Payroll Masters is not engaged in rendering legal or accounting services. Therefore, Payroll Masters assumes no responsibility for claims arising from the use or implementation of the above information.