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Employers, unions warn over Cadillac Tax

April 17, 2015 --

By U.S. Chamber of Commerce

By 2022, over half of all employers will be at risk of paying the 40% excise tax on high-value health plans (“Cadillac Tax”). One notable category of employers is colleges, John Rosenberg writes at The Fiscal Times:

Now, as the scheduled 2018 implementation of the tax gets closer and more and more colleges begin to adjust their health plans to deal with it, awareness of the impending pain is beginning to spread. In New Jersey, four of the state’s 11 public colleges and universities have dropped student health insurance, and three of Washington State’s 6 public institutions have done so as well.

Starting in 2018, the tax will be applied to the value of health plans above the threshold of $10,200 for individuals and $27,500 for families. These thresholds will grow at the rate of inflation instead of the faster historic growth trend of health costs. As a result, the tax, sold as only targeting people who have high-value plans, will hit all sorts of people.To give us a sense of how expansive the 40% excise tax’s reach will be, here’s a chart by Conor Ryan at the American Action Forum. Using HealthCare.gov’s metal levels that describe health plan coverage levels, it shows that the excise tax will not only affect high-value platinum plans but lesser-value gold and silver plans as well.

Individual market premiums projected relative to the 'Cadillac Tax' threshold over the next 35 years.


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