What is the Cadillac Tax?

With the AHCA or the ACA repeal and replace bill being stopped, there are still a few provisions of the ACA that are set to go into place in the coming years.  The most talked about is the Cadillac Tax.

The Cadillac Tax is a tax that will be tied to some insurance plans that are deemed to be overly generous by the government.  The tax would be set at 40% of premiums that are over $10,200 for individuals and $27,500 for families.  This has been a very unpopular portion of the ACA and has been delayed multiple times and now is set to take effect in 2020.

The Kaiser Family Foundation found that by 2028 40 percent of employers could be subject to the Cadillac Tax driving up the cost of health care further.  The main reason that this tax is controversial is that it will start to put more of a healthcare cost onto employees.  However, we are already starting to see the effects of the Cadillac Tax before it even goes into effect.  According to a study done by Wells Fargo, of companies that would be affected by the Cadillac Tax, 36% have or are planning on eliminating Flexible Spending Accounts, 38% have or are planing to implement a spousal care out in there plans and 46% have reduced the value of the plan designs they offer. Only 2% of those polled said they would change nothing and pay the tax.

With Republicans not being able to pass a repeal and replace option we will have to wait and see if the tax will be delayed, repealed or actually take effect.