AGC of America joined with a broad coalition of employers, labor unions and other entities to provide detailed comments to the Treasury Department’s request for information on implementing the 40-percent excise tax on high-cost, employer-sponsored health coverage, also known as the “Cadillac Tax”. The controversial tax has been delayed until 2018, but employers – notably those with labor agreements that stretch into 2018 – are beginning to anticipate the ramifications from the tax.
The nondeductible 40-percent tax applies to the cost of “applicable employer-sponsored coverage” in excess of certain thresholds: in 2018, $10,200 for employee-only coverage and $27,500 for family coverage and linked thereafter to the consumer price index. The linking of the threshold to the index is an additional concern because the medical inflation rate has historically risen twice as fast. This will soon make the tax applicable to a broader array of plans.
AGC supports repealing the tax altogether, but absent repeal, has urged the administration to exercise flexibility in issuing the regulations. The comment letter focused on three areas: (1) the definition of applicable coverage, (2) the determination of the cost of applicable coverage and (3) the application of the annual statutory dollar limit to the cost of applicable coverage.
For more information, please contact Jim Young at youngj@agc.org or (202) 547-0133. Return to Top