Something’s on my mind.
During The Alternative Board’s BizSense with Blair™ recent panel discussion on healthcare earlier this month, there were many small business owners that weren’t familiar with the upcoming Cadillac tax on healthcare and how it will impact their business, amongst other things.
I’d like to share with you what you need to know so you’re prepared: in 2018, a “Cadillac tax” will be imposed as part of the Affordable Care Act (Obamacare). It could impact one and four employers when it takes effect and will impact 42 percent of all employers a decade later. The tax is designed to bolster the cost of the extremely expensive Affordable Care Act, generating an estimated $87 billion over a decade to help offset it.
Let me tell you briefly how it will work. Remember, I am not a healthcare expert but you need to know this.
The lower your employee’s deductable and the higher cost plan they have, the more likely you will be subject to the tax. The tax triggers an excise tax for every dollar that exceeds a certain benefit threshold. For 2018, it’s anything above $10,300 for individual coverage and $27,500 for family coverage. In later years, the threshold will increase at a rate slightly above inflation.
Bottom line: it could cost you a lot of money.
There’s a chance that the policy will change, as bills have been introduced on Capitol Hill to change the law, but nothing is certain.
In business and as a small business owner, there are a lot of things that happen that are out of your control – and this is one of them. It’s frustrating for many that this tax is looming and I am among them. What you can control, however, is your reaction.
So what do you need to do?
You can panic, put off or plan.
I suggest you plan. It’s never been more critical.
One option is to begin offering your employees higher-deductible plans, which will keep them under the threshold. Another option is to limit employee’s options to more favorable plans.
It’s your choice, but I suggest reviewing your health plans now to determine what’s best for you and your business and what’s best for you long term. Contact your broker now so you can plan for the future.
And let me know if there’s anything I can do to help.
By Blair Koch
