So I realize that much of how the high cost health plan excise tax will work is unknown, and that much of it will likely change (or it might even go away), but employers are looking for a best guess at where they stand right now.
What are some resources available at this time regarding how the Cadillac Tax will be calculated etc?
My best guess at this time (maybe I just need more research) for two items in particular are listed below. Please provide thoughts and differing opinions with your support if you would.
First, cost aggregation. I am assuming that for self funded clients the cost of the plan would be the COBRA rates for each plan. But the difficulty is how do FSA/HRA/HSA contributions fit into the calculations. I am guessing it will be an average contribution to each of these accounts for each plan offered that will then be added to the COBRA rates to determine the total cost of each plan option. The alternative would be that the testing is done at the employee level. ie someone contributing $500 to an FSA might lead to an excise tax whereas someone not contributing to the FSA would not. This seems too burdensome. I am also assuming that what the FSA contributions are used for (or even if they are used at all) does not come into plan. Even though this makes no sense considering FSA money could be used for non-medical plan expenditures it is just my guess.
Secondly, how the family tier comes into plan is somewhat unknown. I have seen other's guesses that suggests the testing will be done separately for single and family coverage. It is also up for debate how the testing/calculations would work for a 3, 4 or 5 tier cost structure when the statute is 2 tier. It seems to me that it would make the most sense to simply multiply the cost out for the group, multiply the cost out for the limits, and then compare them. So for example if the employer has a 4 tier cost structure you multiple the enrollment times the 4 tiers x12 and that is your annual cost for that plan option. You then multiply the enrollment times the $10,200 and $27,500 and that gives you an annual cost threshold. The excise tax is then 40% of the difference (if positive). So my guess is that the two tier limits are simply rates used to calculate an annualized limit for the plan, not 2 separate rates to be tested separately.
What are some resources available at this time regarding how the Cadillac Tax will be calculated etc?
My best guess at this time (maybe I just need more research) for two items in particular are listed below. Please provide thoughts and differing opinions with your support if you would.
First, cost aggregation. I am assuming that for self funded clients the cost of the plan would be the COBRA rates for each plan. But the difficulty is how do FSA/HRA/HSA contributions fit into the calculations. I am guessing it will be an average contribution to each of these accounts for each plan offered that will then be added to the COBRA rates to determine the total cost of each plan option. The alternative would be that the testing is done at the employee level. ie someone contributing $500 to an FSA might lead to an excise tax whereas someone not contributing to the FSA would not. This seems too burdensome. I am also assuming that what the FSA contributions are used for (or even if they are used at all) does not come into plan. Even though this makes no sense considering FSA money could be used for non-medical plan expenditures it is just my guess.
Secondly, how the family tier comes into plan is somewhat unknown. I have seen other's guesses that suggests the testing will be done separately for single and family coverage. It is also up for debate how the testing/calculations would work for a 3, 4 or 5 tier cost structure when the statute is 2 tier. It seems to me that it would make the most sense to simply multiply the cost out for the group, multiply the cost out for the limits, and then compare them. So for example if the employer has a 4 tier cost structure you multiple the enrollment times the 4 tiers x12 and that is your annual cost for that plan option. You then multiply the enrollment times the $10,200 and $27,500 and that gives you an annual cost threshold. The excise tax is then 40% of the difference (if positive). So my guess is that the two tier limits are simply rates used to calculate an annualized limit for the plan, not 2 separate rates to be tested separately.
Cadillac Tax questions
0 commentaires:
Enregistrer un commentaire