July 15, 2019

July 15, 2019

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Cadillac Tax Delay – Cruising Until 2022

A continuing resolution which funds the Federal government through February 8, 2018 was passed by Congress and signed into law by President Trump on Jan. 22, 2018.  Previously, as part of a 2015 year-end appropriations bill, the effective date of the Cadillac tax provisions of the Affordable Care Act (ACA) was delayed two years, pushing the start date back from 2018 until 2020.  This new legislation further delays implementation of the Cadillac tax until 2022. 

The Cadillac tax imposes a 40 percent excise tax on the amount of the aggregate cost of employer-sponsored health coverage that exceeds the specified threshold in effect for the calendar year. For example, if an employer offered individual coverage that cost $12,000 per employee, the excess amount for a month would be calculated by ($12,000 / 12 months) - ($10,200 / 12) = $150, based on an annual threshold of $10,200. Therefore, the employer would be taxed 40 percent of $150, or $60 per employee per month.

The Cadillac tax is not dead yet, but this further delay should be factored into your health plan design considerations. 

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About this Author

Sarah Sise practices exclusively in the heavily regulated and constantly evolving field of employee benefits and executive compensation.
Partner

Sarah Sise practices exclusively in the heavily regulated and constantly evolving field of employee benefits and executive compensation. She advises a wide range of clients, including closely-held companies, tax-exempt organizations and public companies.

Sarah brings over 17 years of experience to the firm and partners with clients to establish, design and implement qualified retirement plans, non-qualified arrangements, welfare and fringe benefit plans, and executive compensation programs. She also guides clients through plan audits and service provider changes.

 

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