Have you heard of the Cadillac tax? It’s barreling down the road in 2020 and could mean sticker shock if you are a business owner who provides medical benefits for your employees. While it’s still a few years from crashing into your bottom line, Allstate Benefits can help you prepare and possibly prevent the Cadillac tax from denting and dinging your employees’ health coverage.
This provision of the Affordable Care Act is an excise tax on high-cost, employer-sponsored health plans. But don’t let the luxury-themed name fool you. Each year the tax will net more and more plans as health care costs rise. The tax is triggered when pre-determined limits on contributions to individual and family plans are reached. When this happens employers are penalized 40% of the value that exceeds those limits.
To calculate the cost on individual and family plans, you take plan premiums and add other costs such as HSAs, FSAs, HRAs, wellness and EAP programs. Some estimates claim that half of all employer-sponsored medical plans will take a ride on the Cadillac tax expressway by 2028. But interestingly for business owners and employees alike, certain coverage doesn’t count towards the penalty.
Here’s what’s not included in the Cadillac tax:
- Stand-alone accident and disability coverage
- Critical illness and hospital indemnity plans (paid post-tax)
- Supplemental coverage (GAP)
- Dental and vision plans, outside of core medical
Allstate Benefits provides small businesses like yours voluntary coverage options that can mitigate the impact of the Cadillac tax. Our plans not only help close gaps in major medical insurance, but our voluntary coverage helps give your employees financial peace of mind when they need it most. Are you in Good Hands?® You can be.