26% of Employers could be hit with Cadillac Tax in 2018

August 26, 2015

When the healthcare law was first passed on March 23, 2010, many people would quote Nancy Pelosi who said, "We have to pass this thing and then figure out what's in it." or something along that line. Right or wrong, this is exactly what happened!

Six months after the law was passed, pieces of the law were implemented, and continue to be implemented over time, with a large chunk of the law going into effect on Jan 1, 2014 with the individual mandate and the start of ACA plans for individuals.

Fast forward to today, the end of summer of 2015, we have already seen things removed from the law entirely (1099 reporting), not implemented and abandoned completely by the HHS (CLASS act), and many more items delayed by a year or two - Employer mandates and various reporting delayed and nondiscrimination rules delayed indefinitely, and may never be implemented. It appears that as we actually read and understand this law, we realize it needs some tweaking.

2018 is when the "cadillac tax" is scheduled to be implemented for employer plans that offer 'rich benefits'. The tax is 40% and is expected to raise 87 billion dollars over time to help pay for expanding coverage to Americans. the problem is that in 10 years, this tax is expected to apply to 42% of employer plans! In order to avoid the tax, employers are looking at reducing benefits or shifting more of the cost to employees - not exactly what the law intended to do.

So many are expecting a fight to eliminate or change the thresholds for this tax. Whether this appears on Congress's agenda this fall or down the road, many people believe the Cadillac Tax should be modified or removed completely. Read more: Cadillac Tax. Washington Post