For taxable years beginning in 2018, the affordable care act aca imposes a 40 percent excise tax on highcost group health coverage. Cadillac tax portion of affordable care act is the next. The tax applies to applicable employersponsored coverage or applicable coverage. A component of the affordable care act, it is levied on only. On july 30, 2015, the internal revenue service irs issued notice 2015 52 to continue the process of developing guidance to implement the cadillac tax. While many employers recently have adjusted health benefit coverage levels to satisfy the legal minimums of the employer mandate, the cadillac tax may require these same employers to once again adjust coverage levels. The theory was that it would cut down on health insurance plans that are too generous and that encourage overutilization of health care services. In 2018, if you assume premiums remain at postcadillac tax levels, almost no one would get a tax cut even if the levy is repealed. The cadillac tax of the affordable care act aca begins in 2018.
While many employers recently have adjusted health benefit coverage levels to satisfy the legal minimums of the employer mandate, the cadillac tax may require these same employers to once again adjust coverage levels but this time to avoid exceeding maximum levels specified by aca. Here is our heath care reform update for the week of october 1925, 2014. It is, they say, the type of obamacare fix that republicans. Affordable care act cadillac tax delayed associated general. Aug 12, 2015 irs asks for comments on new cadillac tax rules august 12, 2015 robert sheen cadillac tax, regulations the internal revenue service has identified additional issues under code section 4980i, commonly known as the cadillac plan excise tax, and is proposing new regulations to deal with them. The cr suspends the medical device excise tax through december 31, 2019, and is retroactive to december 31, 2017. The affordable care act aca created a new excise tax, commonly referred to as. Obamacare cadillac tax will lead employers to cut fsas.
Very generally, the cadillac tax applies to taxable years beginning after december 31, 2017 i. Cadillac tax, obamacare, esi, employersponsored health insurance, uninsured. Employers across america breathed a sigh of relief late last year when congress passed, and the president signed, a. But only 5 percent of companies that expect eventually to be subject to the tax actually expect to pay it. Section 4980i excise tax on high cost employersponsored. This week, spring insurance groups ceo, george gonser, discusses the cadillac tax and what it means to employers. Section 9001 of the affordable care act aca, set to take effect in 2018, imposes what it calls an excise tax on high cost employersponsored health coverage, which has come to be known as. Apr 07, 2016 the theory was that it would cut down on health insurance plans that are too generous and that encourage overutilization of health care services. Cadillac tax under the affordable care act aca cigna. Section 4980i excise tax on high cost employersponsored health coverage notice 2015 16 i. Notice 2015 52 addresses how to identify the taxpayers liable for the excise tax, what the employer aggregation rules for the tax are, how to allocate the tax among taxpayers, and how to pay the tax.
A mix of business groups and labor unions are pushing to tee up the next big obamacare fight. What is the purpose of the cadillac tax in the aca. A good clue to understanding the cadillac tax is in its name, which is actually a nickname. If you are selfemployed and are covered through a group health plan, the insurer of your plan will also have to pay the tax. Aca revenue and the importance of the cadillac tax. Bnft, a leading provider of cloudbased benefits management software today published its latest whitepaper, dont. The act delays the onset of the affordable care acts acas cadillac tax by two yearsnow, it will not start until 2020. The cadillac tax is a 40 percent excise tax that is imposed on highcost health plans under section 4980i of the internal revenue code code, which provision was added to the code by the affordable care act aca.
Irs asks for comments on new cadillac tax rules the. In essence, the cadillac tax says that if you, as a small or large employer, are offering healthcare plans that the aca deems excessively costly, those plans will incur a tax on the excessive costs. The health law provision levies a hefty 40 percent tax on the most expensive employerprovided insurance plans. Jul 23, 2015 in 2018, if you assume premiums remain at post cadillac tax levels, almost no one would get a tax cut even if the levy is repealed. In february, the treasury department and the irs issued notice 2015 16, which addressed the definition of coverage to which the cadillac plan tax would be applicable, determination of the cost of the coverage, and the application of the dollar limit to the cost of coverage for determining the portion subject to the tax.
Help finance the expansion of health coverage under the affordable care act aca. The protecting americans from tax hikes act of 2015 included a twoyear moratorium on imposition of the tax for 2016 and 2017, but its slated to go back into effect for 2018. A component of the affordable care act, it is levied on only the most expensive employersponsored. Aug 25, 2015 obamacares cadillac tax on highend health plans threatens to hit 25 percent of u. A fact sheet about the aca cadillac tax 40% excise tax on highcost. Theres one part of obamacare that even many democrats hate the socalled cadillac tax on generous health plans. Benefitfocus publishes guide to understanding the cadillac tax. Along with this delay, the cadillac tax if imposed will be deductible, its thresholds will be indexed starting in 2018, and the controller general must study the underlying age and gender adjustments to the tax. What was the goal of the acas cadillac tax and why was it.
Oct 01, 2015 obamacare cadillac taxwho wants it, and who wont pay. The excise, cadillac tax start thinking ahead by ultimate software november 4, 2015 0 the affordable care acts excise tax is coming january 1st, 2020, and applies to all employersincluding small businesses, taxexempt organizations and government entities. The affordable care act aca imposes a 40 percent excise tax on highcost. Here are all the affordable care act taxes disappearing in. Tax year 2015 aca assurance testing system aats will open for testing in early november for information returns that will be processed in 2016, the irs announced the testing is intended to assist developers of software for processing according to the irs. Wellness programs that are group health plans most wellness programs. Oct 27, 2015 entitled dont get run over by the cadillac tax, the whitepaper explains how the tax works and what employers can do now to reduce exposure to the tax.
The cadillac tax was originally supposed to be implemented in 2018, but in december 2015, lawmakers passed an omnibus spending bill that included a twoyear delay on the cadillac tax. Mar 03, 2015 the cadillac tax is a 40 percent excise tax that is imposed on highcost health plans under section 4980i of the internal revenue code code, which provision was added to the code by the affordable care act aca. Oct 27, 2015 commonly referred to as the cadillac tax, and part of the affordable care act aca, the tax is meant to discourage overly generous healthcare benefits by imposing a 40 percent excise tax on plans. Mar 18, 2015 published on mar 18, 2015 please join us for our next in the series of aca best practices webcasts in which we provide actionable insights how best to comply with ongoing aca requirements. Purpose and overview this notice is intended to initiate and inform the process of developing regulatory guidance regarding the excise tax on high cost employersponsored health coverage under 4980i of the internal revenue code code. This new survey examines the actions employers are taking with the cadillac tax and provides a look at employers understanding and progress toward. Dec 22, 2015 on december 18, 2015, president obama signed the consolidated appropriations act, 2016 act delaying the effective date of the cadillac tax until 2020 and making the tax deductible. This delay was part of a shortterm federal spending bill and changes the effective date from 2020 to 2022. Cadillac tax fact sheet informed on reform overview on january 22, 2018, congress passed and the president signed a twoyear delay of the 40% excise tax on highcost employersponsored health plans, also known as the cadillac tax. According to the cbo in march 2015 the excise tax is the third largest single source of revenue in the aca. Who benefits most from repealing the obamacare cadillac tax.
The cadillac tax is the acas way of dealing with this problem, which has only grown more pronounced over the decades as healthcare spending outstripped inflation. Sep 11, 2015 section 9001 of the affordable care act aca, set to take effect in 2018, imposes what it calls an excise tax on high cost employersponsored health coverage, which has come to be known as. When aca was being considered, policymakers in congress and in the administration began throwing pr. Oct 21, 2015 tax year 2015 aca assurance testing system aats will open for testing in early november for information returns that will be processed in 2016, the irs announced the testing is intended to assist developers of software for processing according to the irs. Aug 26, 2015 obamacares cadillac tax is under siege. Affordable care act tax provisions internal revenue service. Cadillac tax update beginning in 2020, the affordable care act aca will levy a 40 percent excise tax on health plans that are deemed to be overly generous. The excise, cadillac tax start thinking ahead november 4, 2015 by ultimate software the affordable care acts excise tax is coming january 1st, 2020, and applies to all employersincluding small businesses, taxexempt organizations and government entities. Obamacare cadillac taxwho wants it, and who wont pay. High cost employersponsored health coverage excise tax. In december 2015, congress passed and president barack obama signed an initial twoyear delay of the cadillac tax, changing the effective date from 2018 to 2020.
The acas cadillac tax versus a cap on the tax exclusion of employerbased health benefits. This issue brief suggests that the affordable care acts cadillac tax is a blunt. In january 2018, the implementation was postponed until 2022. Obamacares cadillac tax on highend health plans threatens to hit 25 percent of u. The cadillac tax is designed to encourage continue reading. Irs asks for comments on new cadillac tax rules the aca times.
Apr 19, 2020 the cadillac tax was originally supposed to be implemented in 2018, but in december 2015, lawmakers passed an omnibus spending bill that included a twoyear delay on the cadillac tax. Obamacare cadillac tax excise tax on high end plans. Mar 24, 2015 the cadillac tax of the affordable care act aca begins in 2018. Oct 22, 2014 here is our heath care reform update for the week of october 1925, 2014. Affordable care act cadillac tax questions answered. Nov 04, 2015 the excise, cadillac tax start thinking ahead november 4, 2015 by ultimate software the affordable care acts excise tax is coming january 1st, 2020, and applies to all employersincluding small businesses, taxexempt organizations and government entities. Aug 30, 2015 the cadillac tax is the acas way of dealing with this problem, which has only grown more pronounced over the decades as healthcare spending outstripped inflation. Then in early 2018, another spending bill again delayed the cadillac tax, this time until 2022.
In fact the cadillac tax alone equals 12 of total estimated revenue of employer penalty payments. Aca assurance testing system opens soon the aca times. The tax is not imposed on the total cost of the plan, but on the costs exceeding the aforementioned values, which, after 2020, will adjust to inflation annually. On december 18, 2015, president obama signed the consolidated appropriations act, 2016 act delaying the effective date of the cadillac tax until 2020 and making the tax deductible. Employers providing highcost health benefits will be subject to a 40% excise tax, assessed on a monthly basis. Commonly referred to as the cadillac tax, and part of the affordable care act aca, the tax is meant to discourage overly generous healthcare benefits by imposing a 40 percent excise tax on plans. Learn about the latest developments and who will be affected. December 2015 changes make it tax deductible for employers who pay it. As currently structured, i worry that it may create an incentive to.
However, in december 2015, a law delayed the start date to 2020. Leading opponents of the tax have said they would continue to press for it to be rescinded altogether. Hsa bank uses technology and innovation to simplify the. Entitled dont get run over by the cadillac tax, the whitepaper explains how the tax works and what employers can do now to reduce exposure to the tax. A fact sheet about the aca cadillac tax 40% excise tax on highcost employer medical plans. Affordable care action checklist summer 2015 the cadillac tax is designed to reduce health care usage and costs by encouraging employers to offer more costeffective health plans requiring greater employee costsharing.
Published on mar 18, 2015 please join us for our next in the series of aca best practices webcasts in which we provide actionable insights how. Cadillac tax notice and updates new england employee. The excise tax on highcost employersponsored health. One area of the aca that i am examining is the socalled cadillac tax, clinton told the american federation of teachers. Affordable care act cadillac tax delayed associated.
187 640 534 101 1363 254 1326 682 1283 658 1484 1069 1612 1346 739 8 445 1651 513 493 1407 729 1487 561 862 881 19 845 558 314 69