TLDR: A number of matters are awaiting forthcoming guidance—or congressional action.
The Affordable Care Act’s “Cadillac Tax” will require employers to pay a nondeductible 40 percent excise tax on the value of any health coverage that is in excess of $10,200 for single coverage and $27,500 for non-single (family) coverage. Although the Cadillac Tax doesn’t go into effect until 2018, many employers are already trying to take steps to reduce their potential financial exposure. That’s proven difficult, though, because the government has provided employers with little guidance on how the Cadillac Tax will actually be calculated. Fortunately that’s changed thanks to the release of Notice 2015-16 last month from the Internal Revenue Service (IRS) and the Treasury Department and there is more commentary continuing to come in daily from officials. The Society for Human Resource Management (SHRM) expands, “J. Mark Iwry, Senior Advisor to the Treasury Secretary and Deputy Assistant Secretary, said the Treasury Department understood that non-individual coverage in employer-provided plans is sometimes tiered, with one premium cost for employee plus spouse, and a higher cost for employee, spouse, and one or two children, for instance, and perhaps an even higher cost for the couple and three or more children. Iwry expects that future guidance will clarify how the cost of non-individual coverage can be averaged among such tiers to determine if the threshold falls below the $27,500 “family coverage” maximum. He also suggested that employees could be aggregated together based on geographic location in determining how the tax is accessed. As regards costs that are included and excluded, Iwry said that the expense of maintaining onsite clinics that provide “de minimus” or very basic care could be deemed excludable from the total cost calculation. On the contentious issue of why employees’ pretax contributions made through salary deferral to their health savings accounts are considered the same as employer costs, as affirmed in the Treasury’s February 2015 guidance, Iwry said that “Treasury has no discretion to carve out” employee HSA contributions since Democrats in Congress had specifically made it a point to include HSAs under the threshold, and altering that would require statutory change…”
