About this BlogWelcome to the Snell & Wilmer Benefits Blog. We will be posting about current employee benefits and executive compensation topics and issues. We invite you to contact the authors with your thoughts or questions.
Congress Kicks the Can Down the Road Again – Cadillac Tax On High Cost Employer Health Coverage Delayed to 2022
Section 4980I, which was added to the Internal Revenue Code by the Affordable Care Act, was originally supposed to take effect in 2018. This tax is commonly called the “Cadillac tax” because it imposes a 40% excise tax on high cost employer sponsored health coverage.
The Consolidated Appropriations Act signed into law on December 18, 2015, delayed the effective date of the Cadillac tax to 2020. And now, in the federal spending bill that was signed into law on January 22, 2018, Congress has again kicked the can down the road with another two-year delay to 2022. This is welcome news for most employers. Read More ›
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When Anything Less than 95% is a Failing Grade: An Update on the Employer Shared Responsibility Penalties
As a reminder, effective January 1, 2016, employers must offer minimum essential coverage to 95% or more (up from 70% or more for 2015) of their full-time employees and their dependents each month or pay a very steep penalty. Missing the mark even slightly, for example coming in at 94%, will require the employer to pay a $2,000 annual penalty for each full-time employee (minus the first 30 full-time employees).
The rules are explained in more detail in our Health Care Reform’s Employer Shared Responsibility Penalties: A Checklist for Employers, which I have updated to reflect certain recent guidance. Most importantly the revised Checklist:
- now reflects how the penalties are adjusted each year (see footnote 7 of the Checklist for more information);
- the $2,000 subsection (a) penalty is $2,080 for 2015 and $2,160 for 2016.
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