Zinn Insurance Blog | Monique Zinn – What You Need to Know About the Cadillac Tax
Share Decision Zinn Insurance Facebook Page Zinn Insurance Linked In

Healthcare Reform, News You Can Use - Written by on Wednesday, January 13, 2016 18:03 - 0 Comments

What You Need to Know About the Cadillac Tax

Employers, there’s a new tax scheduled to take effect January 1, 2020. President Obama signed into law a spending appropriations bill with several changes to the “Cadillac Tax” section of the Affordable Care Act.

The “Cadillac tax” is an annual tax on employers that offer high-cost health plans to their employees. It’s rumored to be a huge moneymaker for the federal government—a source to help fund other parts of the health care reform. However, employers nationwide are “saying this tax will cause them to stop offering health benefits to employees.”

Here’s what you need to know.

What’s the purpose of the cadillac tax?
The tax was created to encourage employers to offer health care plans in which their employees share the costs. This is the federal government’s way of “nudging employers to make plan changes, so employees have a better understanding of true health costs—and in turn—become more informed health care consumers.”

What does this mean for my business?
This tax “imposes an excise tax of 40% on health plans whose value is more than $10,200 for individual coverage and $27,500 for family coverage.”
For example, if under your current plan you offer an employee “$10,200 in health benefits in 2020 you’d pay $10,200 to the insurer.”
On the other hand, if in you offer a plan valued at $11,000, you would not only be paying $800 more to provide the plan, but would also have to pay an excise tax of 40% of $800, or $320.”

How likely is this tax to become law?
According to several news sources, the likelihood that this tax will take into effect is looking less likely every day. However, it is still too soon to tell what will happen with the upcoming presidential election.

Bottom line, the Cadillac tax is:

  • A moneymaker for the government
  • A means for employers to make affordable plan changes
  • 40% tax affecting employers offering pricey health plans
  • Tax-deductible
  • Permanent

Though this is set to take into effect in 2020, many of our clients in Texas, Arizona, and New Mexico are making changes to their health care plans NOW to avoid this tax in the future.

We’re taking appointments to get your questions answered, and help you find a plan that avoids this upcoming ACA tax. Contact our team to get started immediately.

Source(s): http://on.wsj.com/1TNvdAt, http://huff.to/1O7ewBN, http://wapo.st/1QMGOAo



Comments are closed.

Health Insurance

- Apr 26, 2019 16:32 - 0 Comments

RX Shopping: Discounts, Coupons, and Manufacturing Assistance, Oh My!

There is no denying that prescription drugs can be one of the most expensive costs for health care.

With so many options available to help pay for prescriptions, it can seem like a daunting task figuring out the right solution for you. Luckily, with the revolution of digital technology it […]

Continue reading »

More In Health Insurance


Business Insurance

- Dec 29, 2017 17:49 - 0 Comments

Setting Goals for Your Small Business in the New Year

It’s a new year, and now’s the time to set goals, commit to organization and grow your business. Whether you are trying to sell a new product, increase sales or build your team, follow our top tips to setting goals in 2018.

Get Organized: Now’s the time to go through old […]

Continue reading »

More In Business Insurance


General News

- Dec 29, 2017 17:49 - 0 Comments

Setting Goals for Your Small Business in the New Year

It’s a new year, and now’s the time to set goals, commit to organization and grow your business. Whether you are trying to sell a new product, increase sales or build your team, follow our top tips to setting goals in 2018.

Get Organized: Now’s the time to go through old […]

Continue reading »

More In News You Can Use


Sign up to be notified of upcoming classes.

We regularly host educational events to keep our clients well informed of the latest changes.