Cadillac Tax Calculator

 

There are many open questions about the Cadillac Tax, which will need to be answered by regulations. The interpretation on which this calculator is based represents our current understanding of the statutory language in the absence of regulatory guidance. Other interpretations may be equally valid. In other words, the calculator is not meant to provide all of the information an employer will need to comply with the Cadillac Tax. To learn more about the Cadillac Tax, click here.

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Complete the following to estimate your health plan inflation.

Calculator Information

Coverage Level

2014 Annual Premium

Enter COBRA premium for coverage to be tested

Number of Covered Employees

Enter total number of employees who currently have this level of coverage (optional)

Select an Assumed Trend Percentage

(A conservative estimate is 7-10%)

Estimated Amount of Tax Owed for the Coverage Level Being Tested

(The chart below reflects the amount of the tax each year.)

American Fidelity can help you perform a more detailed analysis of the impact of the Cadillac Tax and suggest ways to help reduce its impact. Schedule an appointment to learn more.

High Bar = Total Cost(EE):
input = previous year
increased by inptrend
inpAp2011 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023

Taxes owed per person:
total cost minus
inpTTOEe2011
2011 2012 2013 2014 2015 2016 2017 2018-- 2019 2020 2021 2022 2023

Total Tax owed Employer:
(Tax owed x # Emps)
inpTT2011
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023

Total Premium:
(Total Cost x # Emps)
inpTP2011
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023

Threshold as Indexed:
inpTval

2011 2012 2013 2014 2015 2016 2017 2018-- 2019 2020 2021 2022 2023

Lower Bar = inpBelThresh2011
Amount over threshold
Total Cost - Tax owed
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023

LOW BAR


This illustration assumes the general thresholds apply, as opposed to the adjusted thresholds for retiree coverage, high risk professions, or plans that have higher-than-average costs due to age or gender of workers. Further, the illustration assumes CPI-U is 3% each year.

  • Background information about the Cadillac Tax

    Beginning in 2018, a 40% non-deductible excise tax will be imposed on insurers/administrators of employer-sponsored health plans with aggregate values that exceed specified thresholds. The expectation is that those costs will be passed back to the plan sponsor. Regardless of whether an employer will redesign its plans to fall below the thresholds or plan to simply absorb any cost increase as a result of the tax, the calculator provides a practical starting point for employers to assess how their current plans may be impacted by the Cadillac Tax.

    Because the thresholds are 2018 figures, comparing the current plan premiums to the thresholds does not provide an accurate result. In order the estimate the impact of the Cadillac Tax, the employer must first project how inflation will impact current plan premiums – both before and after 2018.


Advantages of Partnering with American Fidelity

Reducing the cost of your plan would also reduce the impact of the Cadillac Tax. Click here for some cost management strategies or learn how American Fidelity's services and products can help you save.

American Fidelity Assurance Company does not provide tax or legal advice.

ESB-936(0112)

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