IRS Seeks Feedback on Potential Exceptions to ACA’s ‘Cadillac Tax’
On Monday, IRS issued a notice seeking comments as it prepares to develop regulations for the Affordable Care Act's so-called "Cadillac tax" that is set to take effect in 2018, including on potential "excepted benefit[s]" that would not count toward the tax, Modern Healthcare reports.
Under the ACA, most employer-sponsored health plans with annual premiums of more than $10,200 for individuals or $27,500 for families would pay a 40% excise tax on the portion of the premiums that exceeds those thresholds. The tax is set to take effect on Jan. 1, 2018.
According to Modern Healthcare, the tax was designed to help pay for the ACA and to help reduce health spending. However, some stakeholders, including unions, are opposed to the tax and say it will result in more health care costs being shifted from employers to employees and result in less generous collectively bargained benefits.
Several U.S. companies already have taken steps to scale back generous coverage plans in advance of the tax taking effect, Modern Healthcare reports.
In the notice, IRS said that vision and dental benefits might not count toward the tax. In addition, the agency proposed that employee assistance programs that provide counseling, such as for substance use disorders or family issues, also count as an excepted benefit.
In addition, IRS raised the possibility of adjusting the dollar-limit thresholds of the tax for plans that have "employee populations with age and gender characteristics that are different from those of the national workforce" (Herman, Modern Healthcare, 2/24).
IRS also noted that the ACA allows for the dollar-limit thresholds to be raised for employers with a majority of employees who are engaged in "[h]igh-risk professions" (IRS notice, 2/24). The department detailed several specific examples, including construction workers, firefighters, law enforcement officers, miners and individuals who "repair or install electrical or telecommunication lines." IRS is seeking comments on whether additional guidance on "high-risk professions" is needed.
IRS is seeking comments on the notice through May 15. In addition, IRS is expected to soon release an additional notice regarding how the tax should be assessed and calculated (Modern Healthcare, 2/24).This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.