|The IRS recently released Notice 2015-16, which provides guidance regarding Health Care Reform’s excise tax on high cost employer-sponsored health coverage (the “Cadillac Tax”). By its terms, the notice is intended to “initiate and inform the process of developing regulatory guidance on the tax.”
The Cadillac Tax, which is effective beginning in 2018, is a nondeductible 40% excise tax on the annual value of employer sponsored health coverage that exceeds annual statutory dollar limits. Notice 2015-16 outlines potential approaches for determining the Cadillac Tax that could be incorporated into future regulations, including:
It is anticipated that stand-alone dental and vision coverage (whether self-insured or fully-insured) and on-site medical clinics that offer only de minimis medical care will be excluded from applicable coverage. The IRS is also considering excluding Employee Assistance Programs (EAPs) from the definition.