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How to avoid getting run over by the Cadillac tax
In 2018 a 40% excise tax will be imposed on plan costs that exceed pre-determined dollar limits laid out by the Affordable Care Act. Employers and their benefit advisers have already begun to take steps to avoid or mitigate so-called Cadillac tax exposure. Here are eight strategies Wells Fargo Insurance Services suggests to ensure employers minimize their tax risk.
1. Reduce the medical plan design value.
This is where many plan sponsors will first turn, because its simple and effective, says Daniel Gowen, senior vice president and an employee benefits national practice leader for Wells Fargo Insurance Services USA. Employers need to be careful that they dont reduce the plan design benefits to levels that are too low. Otherwise, they risk dropping the plan design below the 60% actuarial minimum value standard applicable under the ACAs employer play-or-pay mandate.