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Cadillac Tax Postponed Until 2022

Outside of open enrollment there has been little news on the Affordable Care Act. On January 22nd it was announced that the Cadillac Tax will be postponed until 2022. The postponement was included in the short-term budget bill that was signed by the president.

This is a huge relief for Indiana and the rest of the country. The tax was set to become effective 2020, so this year was when most employers were going to start planning for the benefit tax. The problem with planning for the Cadillac Tax is there is little to no guidance currently.

What is the Cadillac Tax and what does it do?

The Cadillac Tax would assess a 40% penalty on the cost of employer sponsored health insurance. The tax would be on premium over $10,200 for single coverage or $27,500 for family coverage. For large Indiana employers that have self-funded plans, the tax could be assessed on what the Cobra rates are.

The fact the penalty has been delayed to 2022, is a huge relief and it could be anticipated that we will continue to see the postponement of this penalty.