President Obama recently signed the Consolidated Appropriations Act of 2016! This act will provide a 2 year delay on the Cadillac Tax and Impose a moratorium on the medical device tax for 2016 & 2017.
The Cadillac Tax was supposed to go active in 2018. This is a 40% tax on health plans that cost more than $10,200 for single and $27,500 for family.
There is a lot of concern with about this tax. 1st who is responsible for paying the tax? Employer or Employee? With many large companies, $27,500 benchmark, is not that high.
There is family coverage in fortune 500 companies, Unions and mid-size companies that exceed that cost. There is really concern the tax would take away the incentive of provide rich benefits to employees.
The Medical Device Excise Tax Moratorium
This is a 2.3% tax on medical device manufactures or importers and has been in place since 2013. This industry has been negatively impacted by this tax, where some companies had to restructure their business model. This usually leads to employees losing their jobs and additional locations not being opened. The new law will freeze this tax for 2016 & 2017.
For more information on the law click here.
