The Internal Revenue Service has begun the process of implementing the looming Obamacare excise tax on employer-sponsored health plans that, according to one recent analysis, could cost large companies subject to the tax $2.1 million per year from 2018 to 2024.

The so-called “Cadillac plan” tax, which will start in 2018, targets overly generous employer-provided health care plans, imposing a 40% levy if the aggregate cost of “applicable employer-sponsored coverage” provided to an employee exceeds $10,200 for individuals and $27,500 for families.

In a recent notice, the IRS asked for comments on proposed approaches to a number of issues involving the tax that could be incorporated in future proposed regulations. Among those issues is the definition of “applicable coverage” and the determination of the cost of applicable coverage.

According to Journal of Accountancy, the IRS anticipates that employer contributions to health saving accounts and Archer medical savings accounts, including salary reduction contributions, will be included in applicable coverage, and employee after-tax contributions to those accounts will be excluded.

In addition, the cost of on-site medical clinics will be included in applicable coverage only if they provide benefits beyond first aid to employees during working hours, although the IRS is requesting comments on how to determine whether the costs of these clinics should be included.

The tax is designed to reduce health care costs by pressuring employers to offer less-generous health insurance plans than in the past. Critics say it is a punitive measure that will move employers toward plans that have higher “cost-sharing” by workers.

An analysis by the American Health Policy Institute found that more than 38% of large companies with more than 1,000 workers will be hit by the tax in 2018 unless they make changes to the design of their health plans. Of all U.S. businesses, 17% are expected to be subject to the tax that year.

The Congressional Budget Office has estimated that the Cadillac plan tax will generate $120 billion for the federal government from 2018 to 2024.

The IRS said that before issuing any proposed regulations, it expects to invite comments on issues relating to the calculation and assessment of the tax.

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