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Cadillac Tax - Costly and Time-Consuming for Tribal Governments

September 29, 2015

An issue of increasing concern to the NAFOA community is the upcoming 40-percent excise tax on high-cost employer-sponsored health plans. Under the Affordable Care Act, the so-called Cadillac tax goes into effect in the beginning of 2018 for both fully insured and self-funded employer health plans. The IRS is continuing its process of developing regulatory guidance (IRS Notice 2015-52) and is requesting comments. NAFOA does not believe tribal governments and tribal entities should be subject to the Cadillac tax. We urge tribal governments to submit comments by the due date of October 1, 2015.

The Cadillac tax will be assessed on the dollar amount of any premium that exceeds the annual limits of $10,200 for individual coverage and $27,500 for family coverage. The tax also includes several other costs such as contributions to flexible spending accounts or health savings plans. Tribal governments in high cost of living regions, such as Alaska, the Northeast, and the West Coast will likely be hit the hardest. In addition to the taxes, there will be a significant administrative burden on tribal government finance and HR staff to complete the mandated reporting. The costs and burdens represented by the regulations will diminish already limited resources available to support tribal government operations.  

For questions or comments please contact Jennifer Parisien at Jennifer@nafoa.org  or (202) 558-8040. 

Resources:

Notice 2015-52

National Indian Health Board's Comments

Comments on Notice 2015-52 can be sent electronically to Notice.comments@irscounsel.treas.gov.