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3 Misconceptions About the Affordable Care Act's Cadillac Tax
- 1. about the Affordable Care Act’s
CADILLAC TAX
Beginning in 2018, the Cadillac tax will apply to employer-sponsored policies with
premiums higher than $27,500 for a family or $10,200 for an individual. Anything
beyond those thresholds will generally get hit with a nondeductible 40% levy.
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MISCONCEPTION
There’s no urgency to make changes; after all,
the tax doesn’t kick in until 2018.
REALITY CHECK
It takes time and research to strategically
plan for the tax, so waiting until the end of 2017 to
take action may be too late. Start now to identify
inefficiencies and cost drivers in the health plans
you have. Then benchmark the data to know if you
are subject to the tax, how much it will be and how
you can reduce it.
MISCONCEPTION
Employees won’t understand the tax or
the changes that will have to be made.
REALITY CHECK
Not involving employees as you seek to make
changes in response to the tax will only increase
misunderstandings and unhappiness. Act now
to create clear, concise messaging that will
engage employees throughout the process.
Need help? Contact Carl Mowery, Managing Director, Compensation
and Benefits Consulting, at +1 312 602 9147 or carl.mowery@us.gt.com.
MISCONCEPTIONS
MISCONCEPTION
The tax affects only big employers
with platinum-plated health care plans.
REALITY CHECK
Estimates are that 26% of employers
offering health plans will be hit by the tax
in 2018 if they don’t make changes. That
number will rise considerably over time.
Platinum
TAXED
Gold plan
TAXED
Silver plan
TAXED
Bronze plan
TAXED
2015 2018
??
??