The Supreme Court is hearing oral arguments Wednesday, March 4 on certain aspects of the Affordable Care Act.  This has the potential to unravel President Barack Obama’s beloved health care plan.

Another aspect of Obamacare that will affect many people is the excise tax on “Cadillac” health care plans.  A Cadillac plan is one that costs over certain thresholds.  Those thresholds for 2018 are:

  • Self-Only Coverage – $10,200
  • Family Coverage – $27,500

broken-yugoThe costs of health care are exploding and this has caused employers to move towards high deductible health care plans.  The idea is to promote more cost-conscious consumerism.  Many employers think this has succeeded.  These plans are cheaper for employers, but much of the burden of the plan when health care is needed falls on employees and their families.

For instance, it is not uncommon for a high deductible health care plan to have a $10,000 deductible for a family.  For most Americans – having to pay $10,000 (pre or post tax) is a very huge imposition.  Those types of plans are potentially Cadillac plans.  Hard to believe right…

So what happens if you have a Cadillac Plan?

If the aggregate cost of your employer-sponsored plan exceeds the limits above, then there is a 40% excise tax.

That is a huge cost for employers and will likely lead to the quality of health insurance being driven down further.

Maybe that is President Obama’s goal – he wants everyone to be driving a broken down Yugo – not that fancy Cadillac.

The IRS is currently asking for public comment on developing regulatory guidance.  Hopefully, changes will be made this may or this may be the death of Obamacare.