The Obama Administration boasts that the individual marketplace will now offer generous, comprehensive health plans. Even single men now have access to maternity coverage. Now, that’s pretty generous. However, employer-sponsored plans will be hit with an Obamacare tax if they offer overly generous health coverage.
Starting in 2018, a 40% excise tax will burden employers who offer coverage that exceeds $10,200 for self-only employee coverage and $27,500 for a worker’s family coverage. A 40% tax will apply for the total dollar amount that exceeds these thresholds. Exceptions will be made for workers with high-risk jobs and retirees not yet eligible for Medicare.
Such luxury plans that employers offer to workers include little cost-sharing and low deductibles. Because these plans are rich with benefits and minimal out-of-pocket spending, supporters believe that the tax will reduce the “moral hazard” of excessive medical care usage.
On the other hand, employees with chronic health conditions benefit from these types of gold-plated plans. Furthermore, the tax could burden more large businesses than originally intended — the monetary threshold will be adjusted based on the consumer price index, but this inflation adjustment will only continue until 2020. Politico’s “Understanding Obamacare” states:
Think of the Cadillac tax as the slow-moving car in the right lane, chugging along at 45 miles per hour. It may be pretty far in the distance, but if you’re an employer and you’re moving along at a reasonable clip in the same lane — say, 60 mile per hour — and you don’t slow down, you’re going to run smack into it.”
