HomeMy WebLinkAbout05. Postponement of Cadillac Tax15
Central Contra Costa Sanitary District
February 8, 2016
TO: ADMINSTRATION COMMITTEE
VIA: ROGER S. BAILEY, GENERAL MANAGER
ANN SASAKI, DEPUTY GENERAL MANAGER
FROM: TEJI O'MALLEY, HUMAN RESOURCES MANAGER
SUBJECT: POSTPONEMENT OF CADILLAC TAX W
This memo is to update the Administration Committee regarding the postponement of
the Cadillac Tax, a provision of the Affordable Care Act (ACA).
In summary, the Cadillac Tax is an excise tax that applies to the cost of employer-
sponsored health coverage exceeding certain limits - $10,200 (self -only coverage) and
$27,500 (family coverage), that was originally set to be effective in 2018. The tax
applies a 40 percent tax rate on the dollar amount above these thresholds.
On December 18, 2015, President Obama approved an omnibus federal funding bill that
delayed the implementation of the tax by two years and contains the following
provisions:
• The Cadillac Tax is delayed until January 2020.
• The thresholds in 2020 will be what they would have been with indexation from
2018, had the tax not been delayed. As such, the thresholds in 2020 will be
higher than $10,200/$27,500.
• The tax will be deductible for employers. This is a notable change in that it would
significantly reduce the cost burden on employers paying the tax.
• The bill commissions a study by the U.S. Comptroller General on possible
adjustments to the current benchmark for claims data to better reflect the age
and gender characteristics of the national workforce.
Staff will keep the Board of Directors apprised of any developments related to the tax,
as well as the other provisions of the ACA.