A Capehart Scatchard Blog

Cadillac Tax on Health Care Plans Delayed Again

By on January 24, 2018 in Legislation with 0 Comments

By: Robert A. Muccilli, Esq.
Editor: Sanmathi (Sanu) Dev, Esq.

In the context of labor negotiations, health benefits is an important issue to both sides of the bargaining table. On January 22, 2018, Congress passed and the President signed into law a two-year delay on the Affordable Care Act’s (“ACA”) 40% excise tax on health care plans, also known as the Cadillac tax. The 40% excise tax applies to the amount by which the cost of coverage exceeds certain monetary thresholds. For individual and family coverage, the annual premium thresholds are $10,800 and $29,500, respectively.

The tax was initially slated to go into effect January 1, 2018, but implementation was subsequently delayed to January 1, 2020.  As a result of passage of the continuing resolution to fund the federal government through February 8, 2018, implementation of the Cadillac tax has once again been delayed by Congress. The new effective date is January 1, 2022.

Implementation of the Cadillac excise tax will impose a significant monetary burden in connection with provision of health care benefits.  This is particularly true in New Jersey where the cost of health care plans is very high.  Fortunately, the latest development offers another two year reprieve, but time will pass quickly.  The new effective date for implementation of the tax will impact negotiation of a successor collective negotiations agreement with a term extending through January 1, 2022.  For this reason, employers will want to keep this development in mind when developing their negotiations proposal.

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Robert Muccilli

About the Author

About the Author:

Robert A. Muccilli, Esq. is Co-Chair of Capehart Scatchard’s School Law Group and a Shareholder in the Labor and Employment Group. For over 25 years, he has focused his practice in the areas of school law, and labor and employment. He has represented school districts with respect to a variety of education law issues involving students, teachers, school construction and special education issues including questions pertaining to inclusion, least restrictive environment, discipline, behavior management, transition, evaluation, discrete trial instruction, medically fragile students, dyslexia, Down Syndrome, Aspergers Syndrome, and equal access to activities and services for disabled individuals. He has also been recognized as one of South Jersey’s Top Attorneys as published by SJ Magazine. Mr. Muccilli is admitted to practice law in New Jersey, the United States District Court for the District of New Jersey and Washington, DC.

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