Section 9001 of the Affordable Care Act (ACA), set to take effect in 2018, imposes what it calls an “Excise Tax on High Cost Employer-Sponsored Health Coverage”, which has come to be known as the “Cadillac Tax.” This is a 40 percent tax on employer-sponsored health benefits that are defined as “excess benefits.” That means anything in excess of $10,200 (employee only) or $27,500 (family) coverage for 2018, with adjustments for subsequent years. The “excess benefit” includes not only benefits provided by the employer, but also the portion of premium paid by the employee, as well as any money the employee chooses to set aside out of salary to pay for health expenses via a Flexible Spending Account (FSA).
Congress has less than a month to make a small fix to Obamacare that could have a big impact on small businesses.
A bill that has been introduced would enable a state to decide whether to expand the definition of a small group health insurance market. It may not seem like a big deal, but lawmakers say the slight change could have a big impact on premiums for more than 3 million employees.
Small businesses are the engines of the American economy, but it’s getting to the point where it is almost impossible for them to get ahead.
Soaring health costs are negatively impacting their ability to compete and still offer affordable health coverage for their employees. Since 2004, the average annual family premium in small firms increased 69 percent. Family insurance premiums for small firms increased from $9,950 in 2003 to $16,834 in 2014, according to the Kaiser Family Foundation. The problem is the economy rose at just a fraction of premium increases, creating an affordability gap many find too difficult to surmount.
The Affordable Care Act (a.k.a. Obamacare) is replete with bad policies. The so-called Cadillac tax is not one of them.
The tax, which would impose a 40% charge on the value of any employer-provided health insurance above $27,500 for a family, is set to be imposed in 2018. Politicians on both the left and the right have set their sights on repealing the provision. Several Republicans recently announced they would be introducing a bill to repeal it shortly after Congress is back in session, and they hope to bring it to a vote by year’s end.
Most of the 275 million Americans with health benefits probably see the logo on the corner of their insurance card and think that’s who has them covered. But for almost 100 million of them—the majority of Americans who get coverage through work—the true insurer is noted somewhere else: on their business card. It’s called self-insurance, and the Obama administration seems interested in curtailing the practice to shore up the Affordable Care Act’s health-insurance exchanges.
With the end of the Obama administration on the horizon, Republican presidential candidates—and members of Congress—are proposing ways to replace or repair the Affordable Care Act. Undoing the damage of ObamaCare may finally become a realistic possibility.
According to preliminary data released by the Internal Revenue Service (IRS) in a letter to Congress on July 17, 2015, about 40 percent of households that received subsidies in 2014 are currently at risk of losing their subsidy eligibility because of complications with their 2014 tax returns. To date 1.8 million heads of households have not submitted the appropriate Affordable Care Act (ACA) related tax forms to reconcile the $5.5 billion in subsidies paid on behalf of these households.
Legislation overturning the Affordable Care Act’s expansion of the small-group insurance market is likely to get a look this fall, according to multiple sources on and off Capitol Hill, and it may be the Obamacare “fix” with the best chance of becoming law.
All the usual caveats apply: Republicans would have to convince the rank-and-file to accept a smaller-scale change to the law while waiting for full repeal. Democrats must be willing to agree to any change at all. Nothing involving Obamacare comes easy.
Big business is against it. So is big labor. Ditto for K Street. What do they want? The repeal of Obamacare’s tax on high cost health care plans. A growing number of Republicans and Democrats in Congress are lining up to agree with them.
As fall approaches, we can expect to hear more about how employers are adapting their health plans for 2016 open enrollments. One topic likely to garner a good deal of attention is how the Affordable Care Act’s high-cost plan tax (HCPT), sometimes called the “Cadillac plan” tax, is affecting employer decisions about their health benefits. The tax takes effect in 2018.