News Headlines Article

Why employers are really cutting healthcare (it’s not Obamacare’s Cadillac tax)
Los Angeles Times

For employers, the big ogre still lurking in the mists of the Affordable Care Act is the so-called Cadillac health plan tax, a levy on employer-sponsored health insurance plans valued above a certain threshold.

The tax starts in 2018, when the thresholds will be $10,200 for single coverage and $27,500 for family plans, adjusted thereafter for inflation. Any value over those thresholds will be taxed at 40%. For a single employee whose coverage comes to $12,000, for example, the employer would pay tax of $720.

But how many employers would be subject to the tax? The Kaiser Family Foundation is just out with an estimate, and it’s substantial. Assuming that health plan premiums grow by only 5% a year between now and 2018, the foundation’s study says, 26% of employers would have at least one component of the healthcare offerings triggering the tax at its inception. Because the inflation index the government applies would undercut healthcare cost increases, that figure would rise to 42% by 2028.