CLIENT UPDATE

Putney, Twombly, Hall & Hirson LLP
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December 21, 2015

Cadillac Tax On Health Care Plans Postponed

On December 18, 2015, President Obama signed an omnibus spending bill which included an extension from 2018 until 2020 of the 40% excise tax on high-cost health plans (also known as the “Cadillac Tax”) under the Affordable Care Act. The extension is significant as it is estimated that approximately 25% of all health plans would have been subject to the Cadillac Tax beginning in 2018. Additionally, the legislation makes the Cadillac Tax deductible by businesses.

Many commentators expect that the two year delay in implementation of the Cadillac Tax will give to Congress time to repeal or amend the Cadillac Tax. For now, however, the Cadillac Tax is expected to take effect in 2020, and employers affected by the Cadillac Tax should prepare and budget accordingly.

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Please contact us if you have any questions regarding the Cadillac Tax or compliance with the Affordable Care Act. We will keep you apprised of relevant developments.