ACA News: Changes to the Cadillac Tax

American flag with title - ACA News: Changes to the Cadillac Tax

Updates ACA news: the Cadillac Tax is delayed, which has caused some changes to the Affordable Care Act. See what’s changed and what it means for business owners and HR professionals.

President Obama has signed a bill that delayed the ACA’s tax on high-value or “Cadillac” health plans by two years.

What is the Cadillac Tax?

The Cadillac Tax is a 40% tax on employers who offer health insurance plans that exceed $10,200 for individuals and $27,500 for families. Scheduled for January 1st, 2018, a large spending and tax bill has pushed the start date to 2020.

PDF Download: 2016 ACA Fact Sheet and ACA Implementation Timeline

 

Changes to the Cadillac Tax

The new bill means that any amount employers or plan sponsors pay towards the tax is now going to be tax-deductible. The bill also calls for a study to check whether the tax uses suitable benchmarks to measure the thresholds. So, you can expect more changes in the future.

The Cadillac Tax with either be enacted in 2020, modified or replaced, or even repealed altogether. The fate is now likely up to the next president and Congress.

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What Does This Mean for Employers?

Now that the tax is delayed, there is no immediate pressure to cut back benefit packages. This provides you and your HR staff more time to check where your insurance plans stand under the Cadillac Tax cost limits. If necessary, you now have until 2020 to find better solutions.

Other ACA compliance and reporting requirements are still relevant. Visit our resources for more information on upcoming provisions and due dates.

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