USI’s Compliance team has prepared a two-part summary addressing preliminary guidance on the Cadillac Plan tax.
Beginning January 1, 2018, a 40% excise tax will apply on the cost of applicable coverage that exceeds prescribed thresholds. The 2018 thresholds are $10,200 for self-only coverage and $27,500 for coverage other than self only. The IRS recently issued Notice 2015-16 to begin the process of developing regulatory guidance regarding this Cadillac Plan tax and its impact on employer-sponsored health plan coverage. Specifically, this Notice addresses:
– the definition of applicable coverage,
– the determination of the cost of applicable coverage, and
– The application of the annual statutory dollar limit to the cost of applicable coverage.
Part I outlines the preliminary guidance around the definition of applicable coverage for purposes of this new tax. A subsequent memo will provide further insight into the determination of the cost of applicable coverage and the application of the statutory limits.
For further guidance or to determine the potential impact of the Cadillac Plan tax on your group, reach out to your local USI Northeast employee benefits office.