Government Funding Bill Defers Cadillac Tax To 2022


The Big Picture:
Already the beneficiary of a two-year delay that passed in December of 2015, the effective date of the “Cadillac tax” has been kicked down the road again, this time to 2022. The stop gap funding measure also suspended the Health Insurers Tax for the 2019 calendar year and reauthorized the Children’s Health Insurance Program (CHIP).

Under the Affordable Care Act (ACA), all high-value health care plans would incur a 40 percent excise tax, the Cadillac tax, billed to healthcare providers.

To be considered a “high-value” plan, the value of the benefits would need to meet or exceed projected thresholds of roughly $10,200 for single coverage and $27,500 for family coverage.  These projections will likely increase by 2022 to reflect inflation.

The funding agreement also affects the annual Health Insurer Fee.  Though the fee will apply for the 2018 calendar year, it is suspended for the 2019 calendar year. It can be assumed that the fee will apply for the 2020 calendar year barring further legislative action.  This decision may be considered a “win” for employers and employees as the fee (historically) influenced premiums for employer provided insurance plans.

Additionally, CHIP, which expired last fall and spent 114 days unfunded, received reauthorization for 6 years.

For more information on how this subject impacts your organization, or to learn how Baker Tilly Vantagen experts can help, contact our team.

The information provided here is of a general nature and is not intended to address the specific circumstances of any individual or entity. In specific circumstances, the services of a professional should be sought. Tax information, if any, contained in this communication was not intended or written to be used by any person for the purpose of avoiding penalties, nor should such information be construed as an opinion upon which any person may rely. The intended recipients of this communication and any attachments are not subject to any limitation on the disclosure of the tax treatment or tax structure of any transaction or matter that is the subject of this communication and any attachments.