The excise tax on high cost, employer-sponsored health insurance coverage (i.e., Cadillac Tax) takes effect in 2018. 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.
To learn more about what this tax is and what it means for your county’s employee health benefits or county budget read the NACo publication Excise Tax on High Cost Employer Sponsored Health Coverage: What Counties Need to Know:
With the excise tax costs expected to rise over the years as health care costs increase, the burden on county budgets may be significant and directly affect employees and taxpayers. It is imperative counties begin to assesses their liability for this tax as soon as possible and develop a strategic solution for 2018 and beyond. This issue brief aims to provide an overview of the excise tax and considerations for counties as they determine their potential tax liability.