mic-1132528_1920You may recall that the so-called “Cadillac Tax,” the ACA’s controversial excise tax on high-cost health plans, was delayed by two years in a bill enacted in December of last year. However, the postponing of its effective date (from 2018 to 2020) has done little to silence those who are in opposition to this widely debated tax.

Even though many employers and sponsors of employee health programs are speaking out against the bill, most American workers have no idea what it entails or that it has even been enacted, much less its potential to change they way they get health coverage and how much they pay for it.

To increase public awareness, the nonpartisan Employee Benefit Research Institute (EBRI) recently held a forum to discuss the tax and its implications. Here are a few facts the forum’s speakers pointed out, that are likely unknown to much of the general public:

  • The 40{d044ab8acbff62f209a116f8142e303cb886f535b0fcf58cb82cde7cb327d3c9} tax is on the total cost of an individual’s health coverage, meaning both theirs and their employer’s share of the cost.
  • The aggregate cost also includes employer and worker pre-tax contributions to FSAs, HRAs, and HSAs.
  • The estimated revenue from the tax is $91 billion over a 10-year period.
  • Of that total, 25{d044ab8acbff62f209a116f8142e303cb886f535b0fcf58cb82cde7cb327d3c9} will come from employers’ payment of the excise tax.
  • The other 75{d044ab8acbff62f209a116f8142e303cb886f535b0fcf58cb82cde7cb327d3c9} will come from additional taxable wages, assuming employers offset the reduced health benefits with higher pay.
  • Over 1/4 of employers who offer a health plan will reach the Cadillac tax threshold by 2018, 42{d044ab8acbff62f209a116f8142e303cb886f535b0fcf58cb82cde7cb327d3c9} by 2028.
  • Despite the delay, many employers have already begun reducing benefits or shifting costs to their employees in order to avoid the tax once it does go into effect.

For more information on the Cadillac Tax, you can read additional notes from the forum by clicking here.