With 2018 fast approaching, many have begun to focus on the Affordable Care Act’s (ACA’s) high-cost or “Cadillac Plan” excise tax, which would impose a 40 percent excise tax on employer-paid health care that is valued over certain thresholds. This provision is seen as an effective “cap” or limitation on an employer’s and employee’s ability to utilize the current income exclusion for employer-paid coverage.
Many employers may be unaware, however, of recent guidance that was issued by the IRS, in conjunction with the Departments of Labor and Health and Human Services (collectively, the Departments), which will limit today an employer’s and employee’s ability to utilize the current federal income and payroll tax advantages for employer-paid health care. More specifically, pursuant to IRS Notice 2013-54 and DOL Technical Release 2013-03, various long-standing tax-preferred arrangements will no longer be permitted.
