Will your business be subject to ACA's "Cadillac tax"? Email
Colorado Green NOW
Tuesday, October 27, 2015 04:00 AM


Image courtesy Free Images/Darren ShawEmployers face a number of challenges when it comes to compliance with the Affordable Care Act (ACA). One element of the program, to be rolled out in 2018, is the so-called “Cadillac tax.” Created as a disincentive to employers who offer exceptionally robust healthcare plans, the Cadillac tax is an excise tax on those expensive plans. Employer contributions to employee insurance premiums are currently tax-free. When the high cost employer-sponsored health coverage excise tax goes into effect, the employer contribution will be subject to a 40% tax.

Supporters of the tax claim that users of expensive plans use more healthcare services due to the low cost, which can drive up healthcare costs in general. Opponents believe that those with chronic or serious illness could be negatively impacted.

The tax will apply to plans in excess of $10,200 for individual coverage and $27,500 for family coverage. The tax money will help fund subsidies related to ACA. It is estimated that 26% of companies will be affected by the tax when it takes effect in 2018, according to The Kaiser Family Foundation.

Some employers are reducing the coverage offered in order to prepare for the 2018 rollout and avoid the tax. Offering less coverage or increasing the cost-sharing to employees is one way to keep the plan beneath the threshold for the tax. Others are focusing their efforts on wellness programs and employee incentives.

To view IRS guidance regarding this new tax, click here.  

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Top awards come home to Colorado
8 hardy tree replacements
Current staff can be key to the recruitment process
Using recycled glass in the landscape