The document summarizes key information employers need to know about the upcoming Cadillac tax scheduled to take effect in 2018. The Cadillac tax is a 40% excise tax on high-cost employer-sponsored health plans above thresholds of $10,200 for individual coverage and $27,500 for family coverage. The tax is intended to encourage employers to offer more cost-effective health plans and engage employees in health care costs. Employers need to start preparing now by analyzing total health care costs, considering other supplemental plans, and reviewing communication strategies around potential changes.

1. ACA Update: What Employers Need to
Know About the Cadillac Tax
Week of October 19-25, 2014
Presented by: George Gonser, CEO Spring Insurance Group
LinkedIn: spring-consulting-group-llc
Twitter: @SpringsInsight
Proprietary and Confidential
©Copyright 2014 Spring Consulting Group, LLC. All rights reserved

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What is the Cadillac Tax:
An excise tax scheduled
to take effect 1/1/2018
to reduce health care
usage and cost
A tool to encourage
employers to offer
plans that are cost
effective and engage
employees to share
in the cost of care
40% levy on
employers that
provide “high cost
health benefits” to
their employees

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Theory Behind the Cadillac Tax:
 The more expansive health insurance coverage a
person has, the less they pay attention to the cost of
healthcare and the more they consume healthcare
services, making them cost more
 Tax was designed to make employers and employees
more cost-conscious with regards to health insurance
plans and healthcare costs
 There are a number of plausible political theories that
offer alternative ideas as to the need for the Cadillac
Tax, but we try to make these webcasts as free of
politics as possible.

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How Do You Calculate the Tax?
 40% tax is based on total premiums
paid by employer and employee that
are above the thresholds
 Thresholds are $10,200 for single and
$27,500 for family coverage
 Threshold indexed depending on
actual medical inflation between
2010 and 2018
 Uses a measure that looks to the Federal
Employees Health Benefits (FEHB)
program
 Thresholds may also be increased for
individuals in high-risk professions
and pursuant to an age and gender
adjustment

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What Constitutes “Total Premiums”?
Employer and
employee contributions
to flexible spending
accounts, health
reimbursements and
health savings accounts

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Who Pays It?
 Tax is paid by insurers (fully-insured plans) and
employers (self-insured plans)
 Cost of tax will likely be passed through the insurers
to the employer

7. Factions nationally are working hard to get tax eliminated. Businesses need to start
preparing now for 2018. With so much at stake, it is critical that companies take a
comprehensive look at their health programs and understand their projected costs
going forward (Health program costs include medical insurance, FSA’s, HRA’s and HSA’s)
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Preparing for the Cadillac Tax
Consumer Directed is now – employees must be encouraged – required to be active
participants in their plan and care and companies have to understand all the costs in
their health programs
 How to prepare:
 Strategically outline all costs with 3-5 year projections
 Look to add other supportive plans such as accident only,
critical illness, and other products to compliment plans
without having these benefits impact the plan cost
calculations
 Review communication strategies around these benefits
and changes

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Contact Us
Phone: 1-800-821-6033
Email: insight@springgroup.com
Twitter: @springsinsight