With Growing Democratic Support, Will The Cadillac Tax Be Repealed?

Last week, the effort to possibly overturn the 40% excise tax on what the Affordable Care Act has deemed “excessively rich” health plans got a boost when Hillary Clinton surprisingly supported its repeal.

Even Bernie Sanders is on board with a bill moving through Congress, which would repeal this so called “Cadillac Tax”, which goes into effect in 2018 unless something is done to derail the effort.

As currently structured, the Cadillac tax will impact employers with benefit plans which exceed $10,200 for individuals and $27,500 for families. The 40% tax will apply to the value of the plans above those caps.

The ACA Cadillac Tax 101: What You Need To Know

As one of the most controversial features of the Affordable Care Act, the so-called Cadillac Tax is currently scheduled for implementation beginning in 2018. This deadline looms large in the minds of many business owners, as the Cadillac Tax, as the law is written, will have a significant impact on businesses of all sizes.

The 40 percent tax targets plans that provide workers with the most generous level of health benefits. These plans are typically employer-paid plans, with low deductibles and little cost-sharing for employees. The excise tax will be applied in 2018 to coverage for health plans exceeding $10,200 for individual coverage and $27,500 for self and spouse or self and family coverage. Any dollar amount beyond these specified caps will be considered excess health spending, and will be penalized at 40 percent, payable by the insurer (e.g. employer).