ACA’s Cadillac Tax Could Hit Public Employers

Governing magazine reports that the Affordable Care Act’s “Cadillac tax,” the transitional reinsurance fee, will require state and local government employers to pay $63 per covered individual each year, starting in 2018. As described, the Cadillac tax imposes a 40 percent excise tax on health insurance issuers and self-funded plans with annual premiums that exceed a certain threshold that’s tied to the rate of medical inflation. Since public employers tend to offer more expensive packages than private businesses, a disproportionate number of public employees could see the fee passed on the them.

There may be differences with how the fee is handled at the county level based on their contracts.  As reported by Governing,

The impact the fee and tax will have and how that will be handled varies between and even within union and nonunion environments. Some public employers may be able to pass the fee and tax onto their workers, while others may be prevented from doing so by the terms of union contracts. Municipalities are scrambling to work with unions to figure out how the tax and fee might fit into future contracts.

For more information, see the full story from Governing.