Congress Delays Onset of the Cadillac Tax

On Dec. 18, Congress passed, and President Obama signed into law, a bill that will delay the start of the Cadillac Tax by two years.

The delay was the result of mounting pressure from Republican lawmakers, labor unions, employers, and insurers, who criticized the tax for potentially forcing employers to cut back on health insurance plans and even shift some healthcare costs onto the employee.

After a swell of support to do away with the tax, Democrats joined the cry for a delay.

Originally scheduled to go into effect in 2018, the new effective date of 2020 puts the decision to uphold or repeal the tax squarely in a new administration’s court. And many Republicans and other critics view the delay as a precursor to eventually killing the tax.

Cadillac Tax Delay: Employers Get Breathing Room

The two-year delay was the result of bipartisan bargaining on other hot-button issues contained in the massive budget deal — such as extending business tax breaks and tax credits for the middle class.

This delay was seen as the most promising path forward, as President Obama had previously said he would reject any bill repealing the tax.

The two-year delay also creates a cushion for employers to properly assess how their plans stand under the Cadillac Tax cost limits.

However, even with the delay, employers need to continue to plan for the tax —  it takes time to redesign and deploy new benefit plans.

The penalties for employers who are not prepared when it becomes effective will be steep. And, employers are paying too much for healthcare and getting too little for it. They need a way to bend the cost curve.

Steps to Keep Healthcare Costs Down

There are many actions employers can take to keep healthcare costs below the limits. One of the most effective of these is investing in employee benefits programs that are not included in the Cadillac Tax’s high-cost limits.

Jiff’s enterprise health benefits platform can help you discover new benefits to offer employees that will bend the cost curve and help you reduce your total health plan costs — without compromising employee health and happiness.

Like retirement planning, the time and investment you spend navigating the Cadillac Tax now pay dividends later.  

Read our FAQ to find out how your company can prepare for the Cadillac Tax.