"Cadillac Tax" postponed - for now.

The Lead Summer 2015 - Lifetime Benefit Solutions

Cadillac Tax Postponed until 2018 - Lifetime Benefit Solutions"Cadillac Tax" postponed - for now.

40% non-deductible excise tax on contributions to FSAs and HSAs delayed until 2020.

For weeks it had loomed. The Cadillac Tax: An excise tax on high cost employer-sponsored health plans which included in its calculation employer contributions to FSAs and HSAs. Many felt this threatened to unduly burden plan members that relied on these accounts if implemented as planned on New Year’s Day 2018.

Fortunately, the Employers Council on Flexible Compensation (ECFC) got involved – and in a big way. The leading nonprofit organization, which promotes choice in benefit solutions, launched the “My Money, My Health” campaign (mymoneymyhealth.org) to give voice to millions of healthcare consumers who would have been negatively impacted by this substantial tax on their health benefits accounts.

The launch of the campaign came on the heels of a letter sent to President Obama from a bipartisan group of U.S. Senators and Members of the House of Representatives, urging the tax’s repeal. Championed as well by major companies across the nation, it asked Congress to act before the end of last year to protect middle class workers who could see their FSA and HSA benefits cut back or even eliminated.

Congress acted, delaying implementation of the tax until 2020.

But this is not enough. According to a report by the American Health Policy Institute (AHPI), nearly 90% of large employers surveyed are already taking steps to avoid triggering the tax in 2020, while approximately 19% are curtailing or eliminating employee contributions to flexible benefits accounts such as Flexible Spending Accounts (FSAs) and Health Savings Accounts (HSAs). According to Bill Sweetnam, ECFC’s Legislative and Technical Director, American employees will continue to feel the negative impact of having less and less opportunity to contribute to an FSA or HSA. Their only alternatives, unless the Cadillac tax is repealed in full or revised   to exempt FSAs and HSAs: Higher premiums and increased co-pays.

This is an ongoing issue that bears monitoring. Mymoneymyhealth.org is the best place to keep an eye on it.


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