It is increasingly likely that the Cadillac Tax will become a major conversation during the upcoming Presidential Election. Here is a refresher course:
The Affordable Care Act includes this tax as a provision. It says that if your plan cost more than $10,200 a year ($850 a month) for a single, it is a “Cadillac” plan and therefore requires an additional tax, totaling 40% of the amount in excess of the $850 a month. This can be substantial.
The real problem lies in the fact that they authors of the bill begin to trend the trigger point in 2018 – not back in 2010. This means that many plans my clients already have in place will be Cadillac plans. In fact, some of them already qualify. This provision will increase even further the cost of health care.
The obvious solution is eliminating it, but there are already immense questions about how all these subsidies are being funded. Another solution would be to change the date that the adjustment (based on the cost of Medical Claims Trends) begins – to the date the law took effect, 1/1/2010.