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Compliance Alert - President Obama Signs Two-Year Cadillac Tax Delay Into Law

On Friday, President Obama signed into law the massive omnibus bill we discussed in our alert last week

Officially titled the Consolidated Appropriations Act, 2016, the new law includes three key changes to the Cadillac tax:

  • Two-Year Delayed Effective Date: The tax is now scheduled to take effect in 2020 (not 2018).
  • Deductibility of the Excise Tax: The 40% excise tax on high-cost coverage will now be deductible for employers (not nondeductible).
  • Potential Revisions to the Age and Gender Adjustment: Congress will study and hear reports on a more suitable benchmark for the Cadillac tax’s age and gender adjustment than the previous reference to the Federal Employees Health Benefit Plan.

All of the presidential candidates in both parties have pledged to repeal the Cadillac tax.

See our webinar The Cadillac Tax Part I: Fight the Future for full details on the Cadillac Tax.

Health Insurer Tax 2017 Moratorium

The ACA tax on fully insured health insurance policies has been eliminated for 2017 only.  This is another ACA provision likely to be modified or repealed by the next Congress and President prior to its scheduled return in 2018.

Commuter Transit Pass Limit Increased to $255 for 2016

The originally separate tax extender bill (referred to as the Protecting Americans from Tax Hikes Act of 2015) was ultimately wrapped into the same overarching omnibus legislation.  Included is a provision that permanently restores parity to the tax exclusion for parking and mass transit benefits.

The transit pass income exclusion limit therefore has been increased from $130/month to $255/month for 2016 (the same as the parking limit).

The prior inexplicable discrepancy between the parking and transit pass income exclusion has long been a focus for reform.  Fortunately, the new law provides indefinite parity for parking and transit passes (rather than the short-term fixes provided in prior years).

2015 ABD Compliance Wrap

Thanks for sticking with us at ABD Compliance for another tumultuous year in employee benefits.  Remember that our extensive library of 2015 Compliance Alerts, as well as full recordings of the 2015 Office Hours Webinars covering a wide variety of timely topics, are all available on our website for on-demand consumption at your convenience.

Happy Holidays!

Disclaimer: The intent of this analysis is to provide the recipient with general information regarding the status of, and/or potential concerns related to, the recipient’s current employee benefits issues. This analysis does not necessarily fully address the recipient’s specific issue, and it should not be construed as, nor is it intended to provide, legal advice. Furthermore, this message does not establish an attorney-client relationship.  Questions regarding specific issues should be addressed to the person(s) who provide legal advice to the recipient regarding employee benefits issues (e.g., the recipient’s general counsel or an attorney hired by the recipient who specializes in employee benefits law).

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