The dance between the federal government and employers over the so-called Cadillac tax continues as the IRS is seeking comments on yet more details of the tax on excessive employer-sponsored coverage.
The latest: Notice 2015-52, which offers more information on how the tax would be triggered, who will have to pay it, age and gender adjustments to the ceiling the tax would crack, and other minutia.
The IRS is clearly struggling with the hugely unpopular tax. Originally designed to discourage employers from offering rich coverage to key personnel, evidence abounds that far more traditional plans would breach the dollar limit now in place. With the industry fighting back and Congress ready to gut the tax, the IRS is asking for public feedback on more elements of the tax.
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The new notice offers such clarity around such confusing issues as who exactly is the plan administrator responsible for the plan's design. IRS acknowledges that its big brains and those at Treasury are pondering two "approaches" to defining who the plan administrator will be and what the duties will entail. But since these two departments are having trouble deciding who the plan administrator will be, the IRS wants the public to weigh in on both approaches.
Another thorny issue is the determination of the employee group that is covered by employer-sponsored insurance. Who's covered under a plan that's being evaluated, and who isn't? This one has raised a range of questions, and again, the IRS would like the public's help in making a decision on which group is the applicable group under the regulations.
Then there's the question of timing: Who is covered when, for how long, and what coverage should count toward the cost of the plan based on these tricky timing issues? You can almost hear the IRS arguing with a voice in its head when raising this matter:
"Treasury and IRS anticipate that the potential timing issues are likely to be different for insured plans and self-insured plans, and will also be different for HSAs, Archer MSAs, health flexible spending arrangements and health reimbursement arrangements (HRAs). In the case of self-insured plans, for example, if the cost of applicable coverage is determined based on a period ending at or before the beginning of the applicable calendar year, then the necessary information should be available to the employer relatively soon after the applicable calendar year ends to permit it to calculate any excess benefit for each employee and allocate any excess benefit among coverage providers.
"In contrast, if the cost of applicable coverage is determined based on a period ending during or at the end of the applicable calendar year, the cost may be determinable only after the end of both the applicable calendar year and a subsequent run-out period during which employees may submit claims for reimbursement. In that case, an employer will need additional time to compute the cost of applicable coverage before it can calculate any excess benefit for each employee and allocate any excess benefit among coverage providers."
The notice continues on in this vein for 17 convoluted pages as the IRS pours out its insecurities, concerns and misgivings about how the tax should be framed. With two-and-a-half more years ahead of us before it takes effect, one wonders whether this one piece of the massive health care reform act won't take the prize for worst health care policy idea ever.
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Dan Cook
Dan Cook is a journalist and communications consultant based in Portland, OR. During his journalism career he has been a reporter and editor for a variety of media companies, including American Lawyer Media, BusinessWeek, Newhouse Newspapers, Knight-Ridder, Time Inc., and Reuters. He specializes in health care and insurance related coverage for BenefitsPRO.
