A Capehart Scatchard Blog

Cadillac Tax on Health Care Plans Delayed Again

By on January 24, 2018 in Legislation, NJ School Law with 0 Comments

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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About the Author:

Established in 1876, Capehart Scatchard is a diversified general practice law firm of over 90 attorneys practicing in more than a dozen major areas of law including alternative energy, banking & finance, business & tax, business succession, cannabis, creditors’ rights, healthcare, labor & employment, litigation, non-profit organizations, real estate & land use, school law, wills, trusts & estates and workers’ compensation defense.

With five offices in New Jersey, Pennsylvania and New York, we serve large and small businesses, public entities, non-profit organizations, academic institutions, governments and individuals.

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