October 2, 2015

Do You Understand the ‘Cadillac Tax’?

Jim Sampson REBC, RHU, ChFC, CLU
Jim Sampson
REBC, RHU, ChFC, CLU

The Cadillac Tax could be onerous. It’s important to understand and prepare for it early to avoid unnecessary expenses.

The tax applies to benefits exceeding $10,200 for individuals and $27,500 for families beginning in 2018. It includes traditional health insurance as well as other benefits, including supplemental insurance plans, flexible spending accounts and, potentially, on-site clinics. If triggered, the tax levies a 40% penalty.

Say a company offers insurance worth $11,000 in 2018. The share of that over the cap is subject to the tax, and 40% of the $800 difference is $320.

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If, however, one employee contributed $2,700 to an FSA, the company was already over the limit. Now, the entire $2,700 is charged the 40% tax, which amounts to $1,080 — quadrupling what the company would otherwise owe. The employer is charged the tax on its workers’ contributions.

HUB offers a Cadillac Tax analysis. Contact us to learn more.

Jim Sampson, REBC, RHU, ChFC, CLU
HUB International Insurance Services
1001 E. Harmony Road, Ste. A-137
Fort Collins, CO 80525
Jim.Sampson@HUBInternational.com
(970) 420-1352

Jim Sampson REBC, RHU, ChFC, CLU
Jim Sampson
REBC, RHU, ChFC, CLU

The Cadillac Tax could be onerous. It’s important to understand and prepare for it early to avoid unnecessary expenses.

The tax applies to benefits exceeding $10,200 for individuals and $27,500 for families beginning in 2018. It includes traditional health insurance as well as other benefits, including supplemental insurance plans, flexible spending accounts and, potentially, on-site clinics. If triggered, the tax levies a 40% penalty.

Say a company offers insurance worth $11,000 in 2018. The…

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