Excise tax on ‘Cadillac’ health plans
The excise tax is a tax on high-value employer-sponsored health plans (“Cadillac” plans) that starts in 2018. The law defines a “Cadillac” plan as one in excess of $10,200 for individual coverage and $27,500 for family coverage. The excise tax is equal to 40% of the value of the plan that exceeds this threshold and is imposed on the issuer of the health insurance policy, which in the case of a self-insured plan is the plan administrator or, in some cases, the employer.
The aggregate value of the health insurance plan includes reimbursements under a flexible spending account for medical expenses (health FSA) or health reimbursement arrangement (HRA), employer contributions to a health savings account (HSA), and coverage for supplementary health insurance coverage, excluding dental and vision coverage.
The thresholds are to be increased at the same rate that the Consumer Price Index (CPI-U) increases, starting in 2020. It is also increased for retired individuals age 55 and older who are not eligible for Medicare and for employees engaged in high-risk professions by $1,650 for individual coverage and $3,450 for family coverage. The threshold amounts may be adjusted upwards if health care costs increase more than expected prior to 2018. The threshold amounts will be increased for self-insuring firms that may have higher health care costs because of the age or gender of their workers.
For questions or additional information about the Excise Tax please email COSE’s advocacy team.
(Note Section 9001: Excise tax on high cost employer-sponsored health coverage.)