Cadillac tax will affect one in ten US single employer plans in 2018, more in CSG-ERC region

August 31, 2015

Under the Affordable Care Act, in 2018 high cost employer-sponsored health plans will begin paying a hefty 40% tax, termed the Cadillac tax, on the value of the plan over specified threshold levels. A new report by the Congressional Budget Office estimates that 10.2% of US single premium plans and 6.0% of family plans will exceed the threshold and trigger the tax. Most CSG/ERC states are expected to exceed the national rates. In the region, MA and CT single and family plans, respectively, are most likely to trigger the tax in 2018, while PA and RI plans are least likely. The 2018 threshold levels will be $10,200 for single premiums and $27,500 for family plans, with modifications for some groups. As the threshold levels for the tax will rise every year linked to the rate of general inflation, experts expect the percentage of plans subject to double or triple by 2028. Proponents of the tax argue that it serves as a powerful incentive to control health costs, but opponents feel it is unfair to groups with high cost workers or those who negotiated their compensation to favor health benefits. Congress is considering proposals to repeal the tax.

Employer plans expected to exceed tax threshold, 2018
Single Family
CT 13.6 11.9
DE 14.8 7.6
ME 10.0 5.5
MD 11.5 8.7
MA 15.8 8.2
NH 12.0 6.1
NJ 14.0 9.7
NY 13.8 8.2
PA 9.3 4.5
RI 9.9 3.6
VT 11.4 5.8
US 10.2 6.0
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