Cadillac Tax/Health Insurance Fee

On February 23rd, the Treasury Department and the Internal Revenue Service (IRS) released information related to two provisions of the Affordable Care Act (ACA): the high-cost employer-sponsored health coverage, otherwise known as the “Cadillac tax”, and the annual fee imposed on health insurance providers.

• This initial notice on the Cadillac tax describes potential approaches that could be incorporated in proposed regulations regarding: the definition of applicable coverage; the determination of the cost of applicable coverage; and the application of the annual statutory dollar limit to the cost of applicable coverage. The IRS invites public comment on these approaches through May 15th.

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• The guidance on the annual fee imposed on health insurance providers describes entities excluded from the fee. In August 2014, the Treasury Department and IRS issued guidance on entities excluded from the fee for 2014. This guidance provides additional information on excluded entities for 2015 and subsequent years. Alongside this issuance of “temporary and final” guidance, the IRS released the same text as a proposed rule. This parallel approach means that the guidance has the full force of law during the rulemaking process, but that after comments are collected and reviewed, the IRS will issue a final rule which may modify the guidance in response to stakeholder feedback. Comments are due by May 27th.

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