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Gear up for Cadillac plan tax

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in Small Business Tax

Most employers are aware that the health insurance mandate under the Patient Protection and Affordable Care Act (PPACA), the law known informally as Obamacare, finally kicks in next year. But a potentially more costly provision for “Cadillac plans” is just down the road. This is the term used to describe high-cost health insurance plans with top-of-the-line benefits.

Effective for 2018 and thereafter, employers will be required to pay an excise tax on a plan costing more than $10,200 for an individual or $27,500 for a family.

The excise tax is equal to 40% of the cost of premiums above these thresholds.

The Cadillac plan thresholds under Obamacare will be indexed for inflation after 2018.

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