Employers Welcome Affordable Care Act Cadillac Tax Delay by Adam Cohen, CPA

Posted on February 18, 2016 by Adam Cohen

Among the provisions included in the recently passed federal spending bill is a two-year delay in the Affordable Care Act’s 40 percent excise tax imposed on employer’s sponsoring high-cost health insurance plans. With the postponement of the so-called “Cadillac” tax, employers who offer health insurance valued at more than $10,200 for individual plans and $27,500 for family coverage will have more time to rein in costs without watering down employee benefits. Moreover, under the new bill, employers will be able to deduct their payment of the tax, if and when their health plans exceed the thresholds, which will be indexed for inflation.

While the recent delay provides lawmakers with a potential open door to repeal the tax entirely in the future, employers offering workers generous health benefits should continue planning for the 2020 Cadillac Tax. One option to consider is to implement health savings accounts (HSAs) to help workers cover more out-of-pocket medical costs. For 2016, the maximum amount employees may contribute to an HSA is $3,350 for individuals or $6,750 for family coverage. HSA participants who are 55 or older have the option to contribute an additional $1,000 “catch-up” contribution this year.

The advisors and accountants with Berkowitz Pollack Brant’s Tax Services practices work with individuals and businesses of all sizes to understand and comply with the provisions of Affordable Care Act.

About the Author: Adam Cohen, CPA, is an associate director in the Tax Services practice of Berkowitz Pollack Brant, where he works with closely held businesses and non-profit charities, hospitals and family foundations to maintain tax efficiency and comply with federal and state regulations. He can be reached at the CPA firm’s Ft. Lauderdale office at (954) 712-7000 or via e-mail