Good Neighbor Insurance (www.gninsurance.com and www.gninsurance.com) is continuing to update our clients on the new health insurance laws.   There are six major coverage options for those in the US and even though some of the rules and regulations are similar for all many differences are there and it all depends on how old you are and for whom you work.  Many critical details of this new insurance law will be clarified in the months and years to come.

Can you tell me more about the 40% excise tax on so-called Cadillac Plans for 2018?

This tax is mainly to discourage companies from providing too rich a benefit. The excise tax, beginning in 2018, will be equal to 40% of the aggregate value of applicable employer-sponsored coverage that exceeds $10,200 for an individual policy and $27,500 for a family policy, indexed to inflation. The thresholds are pegged to a health cost adjustment formula that is designed to increase the thresholds in the event that the actual growth in the cost of U.S. health care between 2010 and 2018 exceeds the projected growth for that period. There are slightly higher thresholds for “high-risk professions” listed in the law.

The aggregate value is determined under the rules of COBRA continuation. It takes into account all employer-sponsored coverage (including employee contributions), including premiums, a Flexible Spending Account (FSA), a Health Reimbursement Arrangement (HRA), and a Health Savings Account (HSA), along with other supplementary health insurance coverage. It excludes vision, dental, accident, disability, and long-term care coverage. The employer is responsible for calculating amounts subject to the tax and reporting to each Plan Administrator, which is responsible for reporting and paying tax to IRS.

Does the excise tax on Cadillac Plans apply to Taft-Hartley (union) Plans?

Yes.

Doug Gulleson totally adores scuba diving and travels overseas throughout the year with his underwater camera in one hand and a cup of coffee in the other.   Visit Good Neighbor Insurance at www.gninsurance.com  and www.gninsurance.com/tripcancellation for Arizona and international travel insurance coverage.