The Cadillac Tax, your health plan and how it impacts you?

Over 25% of employers expected to be hit in 2018

As an employer offering health insurance to your employees, I’m sure you’ve heard about the Affordable Care Act (“ACA”) and the upcoming Excise Tax in 2018.  According to a study from the Kaiser Family Foundation, they expect 26% of employers to be subject to the Excise Tax in 2018 absent any plan design changes.

As you’ve probably discussed with your healthcare consultants, this is the time to begin reviewing plan design changes such as changing deductibles & co-pays, narrowing networks, using a private-exchange and more.

Additionally, one of the key items that you may not have considered in relation to the Excise Tax are Flexibile Spending Accounts (“FSA’s”).  Many employers offer FSA’s as a way for employees to set aside funds on a pre-tax basis to pay for medical expenses not covered by insurance.  With the ACA, this spending or deferral is counted toward the calculation of the Excise Tax.  So, an employee who decides to defer the $2,500 maximum would generate a $1,000 excise tax for the employer if they’re already at that threshold.  As such, you will want to review your FSA strategy as part of your entire healthcare portfolio as we approach 2018.

While there has been much talk of eliminating or modifying the Excise Tax, it is still on the books for 2018.  Therefore, we encourage you to begin reviewing your plans to avoid an unfortunate surprise in 2018.

If you have any questions, feel free to contact one of our advisors.

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