Health care reform
Employers have long been aware of the excise or "Cadillac" tax that, beginning in 2018, will be imposed on "applicable employer sponsored coverage" in excess of $10,200 (for individuals) and $27,500 (for families). The dollar value of applicable employer sponsored coverage includes:
This last item — employer HSA contributions — has not yet been fully defined. The IRS is trying to decide whether an employee's pre-tax HSA contributions should be considered part of the employer's contribution, and thus included in the tax calculation. (Employees’ post-tax contributions are expected to be excluded.) To finalize this rule, the IRS is asking for comments from employers on this issue. Comments will be accepted through May 15.
Including employees' HSA contributions in the excise tax calculation would result in some plans exceeding the $10,200 and $27,500 thresholds more quickly than otherwise expected.
Employers should also be aware that all Unum benefits are reform-ready, HIPAA-excepted* benefits. This means that adding Unum benefits to a company's benefits package will not increase the employer’s risk of being subject to the Cadillac Tax.
* HIPAA refers to the Health Insurance Portability and Accountability Act. For the purposes of health care reform, certain types of coverage are designated as “excepted benefits” and are not subject to the Patient Protection and Affordable Care Act.