Congress delays implementation of ‘Cadillac Tax’ on employers

Q&A with Brandon Long

published in The Oklahoman | December 18, 2015

Included in a $1.8 trillion spending package Congress passed this week was a measure delaying the implementation of a key provision of the Affordable Care Act, the so-called “Cadillac Tax,” from 2018 to 2020. The Cadillac Tax imposes a hefty 40 percent tax on high-cost health coverage provided by employers to employees that exceed certain limits — $10,200 for self-only coverage and $27,500 for family coverage.

Employee benefits attorney Brandon Long was interviewed by The Oklahoman about the controversial nondeductible excise tax and what the two-year delay means for employers.

“Large employers have been working so hard the past few years to comply with the ACA’s play-or-pay rules, which penalize large employers for not offering certain levels of health coverage,” said Long. “So much time and money has been spent by employers trying to identify their full-time employees and determine what coverage needs to be offered to avoid the potentially significant penalties. So, while employers are working hard to comply with the rules, the ACA’s Cadillac Tax seems to be at odds with the ACA mandate to offer coverage.”

Long also noted that the tax will likely affect more than just the richest of health plans. “While we’ve all been referring to the tax as the Cadillac Tax, it appears from some of the proposed regulatory guidance issued earlier this year that the tax is likely to sweep in a broader range of health plans,” he said.