Smart Benefits: Public Comment Period for Cadillac Tax Closed
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Monday, May 18, 2015
Rob Calise, GoLocalWorcester Business/Health Expert
Starting in 2018, employers – including governments and school districts – will have to pay a 40 percent tax on employer-sponsored coverage that exceeds $10,200 for individuals and $27,500 for families, a dollar limit that can be revised annually.
According to a recent report from the American Health Policy Institute (AHPI), 17 percent of all U.S. businesses will have to pay the tax in 2018, including 38 percent of large employers. To avoid paying the tax, employers may pare down the health benefits they offer to shift costs to employees, such as increasing co-pays and the annual out-of-pocket deductible.
A bill introduced in the House in February that would repeal the tax was referred to committee. The only hope employers and employees have for relief now rests in the hands of the Treasury Department and IRS, who are responsible for the implementing regulations.
In February, the departments issued Notice 2015-16 and asked for comments about the tax. The comment period ended on May 15. The Treasury Department and IRS will have to weigh the feedback received to issue future guidance. The question now is whether they will exercise their regulatory authority to reduce the impact on employers and employees.
Rob Calise is a founding partner of Cornerstone Group, where he helps clients control the costs of employee benefits by focusing on consumer driven strategies and on how to best utilize the tax savings tools the government provides. Rob serves as Chairman of the Board of United Benefit Advisors, and is a board member of the Blue Cross & Blue Shield of RI Broker Advisory Board, United HealthCare of New England Broker Advisory Board and Rhode Island Business Healthcare Advisors Council. He is also a member of the National Association of Health Underwriters (NAHU), American Health Insurance Association (AHIA) and the Employers Council on Flexible Compensation (ECFC), as well as various human resource associations. Rob is a graduate of Bryant University with a BS in Finance.
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