Tag: Ridgewood Municipal Employees

file photo by Boyd Loving

Reader asks ,please don’t forget the ACA excise taxes from 2020~…. that’s another 40% on platinum level health benefits like those our teachers, police and fire currently enjoy. They either all need to be downgraded to bronze level health benefits or taxpayers will bear the brunt of the 40% tax on $25,000 family plans, i.e. an additional $10,000 a year per Village and BOE employee with a platinum family plan. Who pays for that?

 

Ridgewood NJ, On December 18, 2015, Congress passed and the President signed a two-year delay of the 40 percent excise tax on high-cost employer-sponsored health plans, also known as the “Cadillac Tax.” This delay was part of a year-end government funding package and changes the effective date from 2018 to 2020. While the tax was originally non-tax deductible, the December 2015 changes make it tax deductible for employers who pay it.

No regulations have been issued to date. In February and July 2015, the Internal Revenue Service (IRS) issued notices covering a number of issues concerning the Cadillac Tax, and requested comments on the possible approaches that could ultimately be incorporated into proposed regulations.

What it is/fee duration	Permanent, annual tax beginning in 2020 on high-cost employer-sponsored health coverage.
Purposes	Reduce tax preferred treatment of employer provided health care Reduce excess health care spending by employees and employers Help finance the expansion of health coverage under the Affordable Care Act (ACA)
Amount	The tax is 40% of the cost of health coverage that exceeds predetermined threshold amounts. Cost of coverage includes the total contributions paid by both the employer and employees, but not cost-sharing amounts such as deductibles, coinsurance and copays when care is received. For planning purposes, the thresholds for high-cost plans are currently $10,200 for individual coverage, and $27,500 for family coverage. These thresholds will be updated before the tax takes effect in 2020 and indexed for inflation in future years. The thresholds will also be increased: If the majority of covered employees are engaged in specified high-risk professions such as law enforcement and construction, and For group demographics including age and gender. For pre-65 retirees and individuals in high-risk professions, the threshold amounts are currently $11,850 for individual coverage and $30,950 for family coverage. These amounts will also be indexed before the tax takes effect.
Who calculates and pays	Insured: Employers calculate and insurers pay Self-funded: Employers calculate and “the person who administers the plan benefits” pays HSAs and Archer MSAs: Employers calculate and employers pay
How a group health plan’s cost is determined	The tax is based on the total cost of each employee’s coverage above the threshold amount. The cost includes contributions toward the cost of coverage made by employers and employees. The statute states that costs of coverage will be calculated under rules similar to the rules for calculating COBRA premium.
How the tax will be paid	Forms and instructions for paying the tax are not yet available.
Tax implications	Based on the December 2015 changes, Cadillac Tax payments will be deductible for federal tax purposes.
Applicable types of coverage	Insured and self-insured group health plans (including behavioral, and prescription drug coverage) Wellness programs that are group health plans (most wellness programs) Health Flexible Spending Accounts (FSAs) Health Savings Accounts (HSAs), employer and employee pre-tax contributions* Health Reimbursement Accounts (HRAs)* Archer Medical Savings Accounts (MSAs), all pre-tax contributions* On-site medical clinics providing more than de minimis care* Executive Physical Programs* Pre-tax coverage for a specified disease or illness Hospital indemnity or other fixed indemnity insurance Federal/State/Local government-sponsored plans for its employees Retiree coverage Multi-employer (Taft-Hartley) plans

https://www.cigna.com/health-care-reform/cadillac-tax