How Good Is Your Insurance? ‘Cadillac Tax’ Looms for Large Employer Health Plans
While most companies expect health care cost increases to hold steady next year, nearly half of large employers say that if they can’t find new ways to cut costs, they’re going to cross the “Cadillac tax” threshold in 2018, according to a new study by the National Business Group on Health.
Passed as part of the Affordable Care Act and going into effect in 2018, the Cadillac tax will hit employers whose plans cost more than $10,200 for an individual or $27,500 for a family. The employer will have to pay a 40 percent tax on the cost of each plan above those levels.
Among the companies surveyed, 48 percent said that at least one of their benefit plans would trigger the Cadillac Tax. By 2020, 72 percent of employers say one of their plans will trigger the tax, and 51 percent say their most popular plan will be subject to the tax.
Related: Obamacare’s Cadillac Tax Hits the College Campus
“The need to control rising health care benefits costs has never been greater,” NGBH President and CEO Brian Marcotte said in a statement. “Rising costs have plagued employers for many years and now the looming excise tax is adding pressure.”
Employers expect keep benefit costs increases to 5 percent this year by pushing more costs onto workers via consumer-directed health plans (76 percent) and expanding wellness initiatives (70 percent).
None of the 425 employers surveyed said they planned to eliminate their health care coverage, but nearly a quarter said they’d consider offering employees a private exchange.
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Map of the Day: Navigating the IRS
The Taxpayer Advocate Service – an independent organization within the IRS whose roughly 1,800 employees both assist taxpayers in resolving problems with the tax collection agency and recommend changes aimed at improving the system – released a “subway map” that shows the “the stages of a taxpayer’s journey.” The colorful diagram includes the steps a typical taxpayer takes to prepare and file their tax forms, as well as the many “stations” a tax return can pass through, including processing, audits, appeals and litigation. Not surprisingly, the map is quite complicated. Click here to review a larger version on the taxpayer advocate’s site.
A Surprise Government Spending Slowdown
Economists expected federal spending to boost growth in 2019, but some of the fiscal stimulus provided by the 2018 budget deal has failed to show up this year, according to Kate Davidson of The Wall Street Journal.
Defense spending has come in as expected, but nondefense spending has lagged, and it’s unlikely to catch up to projections even if it accelerates in the coming months. Lower spending on disaster relief, the government shutdown earlier this year, and federal agencies spending less than they have been given by Congress all appear to be playing a role in the spending slowdown, Davidson said.
Number of the Day: $203,500
The Wall Street Journal’s Catherine Lucey reports that acting White House Chief of Staff Mick Mulvaney is making a bit more than his predecessors: “The latest annual report to Congress on White House personnel shows that President Trump’s third chief of staff is getting an annual salary of $203,500, compared with Reince Priebus and John Kelly, each of whom earned $179,700.” The difference is the result of Mulvaney still technically occupying the role of director of the White House Office of Management and Budget, where his salary level is set by law.
The White House told the Journal that if Mulvaney is made permanent chief of staff his salary would be adjusted to the current salary for an assistant to the president, $183,000.
The Census Affects Nearly $1 Trillion in Spending
The 2020 census faces possible delay as the Supreme Court sorts out the legality of a controversial citizenship question added by the Trump administration. Tracy Gordon of the Tax Policy Center notes that in addition to the basic issue of political representation, the decennial population count affects roughly $900 billion in federal spending, ranging from Medicaid assistance funds to Section 8 housing vouchers. Here’s a look at the top 10 programs affected by the census:
Chart of the Day: Offshore Profits Continue to Rise
Brad Setser, a former U.S. Treasury economist now with the Council on Foreign Relations, added another detail to his assessment of the foreign provisions of the Tax Cuts and Jobs Act: “A bit more evidence that Trump's tax reform didn't change incentives to offshore profits: the enormous profits that U.S. firms report in low tax jurisdictions continues to rise,” Setser wrote. “In fact, there was a bit of a jump up over the course of 2018.”
