Ready for the “Cadillac Tax”?

December 30, 2015

With the fickle business environment, businesses must be able to adapt to the various changes that occur in order to be efficient and successful and with a new tax called the “Cadillac Tax”, it will put all existing businesses’ ability to adapt to a dynamic business environment to the test.

The “Cadillac Tax” was proposed to achieve multiple goals such as: bringing uniformity between the different social classes due to employers of lower income employees typically not providing or providing very minimal subsidized employer sponsored health insurance for those employees; cutting costs on healthcare spending due to some taking advantage of their employer sponsored healthcare plan by going to the doctor when they don’t necessarily need to; and encouraging employers to shift funds used to subsidized health plans towards providing high salaries or wages to their employees. This new tax, which is expected to be ratified in 2018, imposes a 40% excise tax on employer sponsored health plans that exceed a threshold of $10,200 for individuals and $27,500 for families. Although the 40% tax is directly effecting the health insurance companies, this tax will ultimately be passed onto the employers that are sponsoring their health plans. This tax will surely have a big impact on a large amount of employers business operations due to employers most likely being inclined to take preventative measures to avoid having this “Cadillac Tax” passed onto them.

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