Will your plans trigger the “Cadillac Tax”?

In 2018 the Cadillac Tax begins.  15% of plan sponsors surveyed by Employee Benefit Adviser magazine in January 2015 say one of their plans will be hit with this tax.  Will yours?

The ACA provision is often called the “Cadillac” tax because it targets so-called Cadillac health plans that provide workers the most generous level of health benefits. These high-end health plans’ premiums are paid for mostly by employers. They also have low, if any, deductibles and little cost sharing for employees.

A 40 percent excise tax will be assessed, beginning in 2018, on the cost of coverage for health plans that exceed a certain annual limit ($10,200 for individual coverage and $27,500 for self and spouse or family coverage). Health insurance issuers and sponsors of self-funded group health plans must pay the tax of 40 percent of any dollar amount beyond the caps that is considered “excess” health spending.

So lets back up the premiums.  Assuming that premiums ONLY trend at 7% for 15, 16 and 17 – if your single premium is $650 and/or your family premium is $1750 today, those plans will be subject to the tax.   At 10% increases, the numbers are $580 and $1560.