The Internal Revenue has identified additional issues under Code Section 4980I, commonly known as the “Cadillac Plan Tax” excise and is proposing new regulations to deal with them.
The agency is seeking public comments until October 1 on the proposed changes in the Affordable Care Act rules regarding the excise, which will apply to years beginning January 1, 2018.
In February, the Treasury Department and the issued Notice 2015-16, which addressed the definition to which the “Cadillac Plan Tax” would be, determination the the , and the application the dollar limit to the for determining the portion subject to the .
The latest announcement, Notice 2015-52, addresses additional issues, including the identification taxpayers who may be liable for the tax, the effect aggregation, allocation the among taxpayers, and the .
After reviewing public comments both Notices, the and Treasury intend to issue proposed regulations on the excise .
The imposes a 40% excise any “excess benefit” granted to an over the dollar limit for the as specified under the law.
One issue addressed in the latest Notice is defining the “ provider,” who may be the issuer, the , the plan administrator or the plan sponsor.
The noted that, if an company must pay an excise behalf an , the insurer is likely to pass through that added to the . But because the excise is not deductible for purposes, the company is likely to charge the not just the amount the excise but for the additional income the company will incur.
In addition, the Notice acknowledges that dollar limits on may vary depending the age and gender characteristics the population, since on average, older employees have higher costs than younger workers, and younger women have higher costs than younger men.
The agencies also want public comment how the excise might affect savings accounts, flexible spending accounts and similar trust or custodial accounts.