December 2013/January 2014
December 17, 2013

Health Advocate: Unions to monitor 2018 insurance tax regulations

Author: by Sue Klug
Source: NYSUT United

The so-called "Cadillac" tax provision of the Affordable Care Act (ACA) is creating confusion for the general public and has been invoked by employers during contract negotiations regarding health insurance.

What is the "Cadillac" tax?

Beginning in 2018, an excise tax will apply to high-cost health insurance plans. The cost of a plan in excess of $10,200 for individuals and $27,500 for family coverage will be subject to a 40 percent excise tax. The tax will be paid by health insurance companies or the plan sponsors for self-insured plans.

The tax does not apply to separate dental and vision plans. It does apply to health reimbursement arrangements, health savings accounts and medical flexible spending accounts.

The provision is not effective for another four years and may be modified in the interim. Federal regulations still need to be issued before we know if or how it would apply to NYSUT members. NYSUT and its affiliates, AFT and NEA, will carefully monitor developments concerning this issue.

— Sue Klug