Bow Times August 2015
The Selectmen on July 14 began to wrestle with a new Obamacare tax that could cost the town up to $117,000 according to Town Manager David Stack. The “Cadillac Tax” is the informal name for the “Excise Tax on High-Cost Employer-Sponsored Health Coverage,” a provision of the Patient Protection and Affordable Care Act (ACA), which takes effect January 1, 2018.
The Cadillac Tax is intended to encourage employers, health insurance providers and consumers to control health costs. Beginning in 2018, a 40 % excise tax will be imposed on the “excess benefit” of employer group health plan coverage over and above certain threshold amounts. According to the N.H. Municipal Association, the estimated 2018 threshold amounts are $10,200 for individual coverage and $27,500 for 2-person or family coverage. Higher thresholds will apply for early retirees (age 55-65) and plans with a majority of employees in high-risk occupations (police and fire). The 2018 thresholds also may be increased depending on actual medical inflation between 2010 and 2018 and pursuant to an age and gender adjustment. Starting in 2019, the thresholds will be indexed for CPI rate of inflation. The insurer is responsible to pay the tax for fully insured group health plans; but for self-insured plans (like Bow that are part of a risk pool) it is still unclear who will be treated as the plan administrator responsible for paying this tax.
A meeting was held in July with Health Trust, the town’s risk pool. The selectmen are exploring ways in which to save money on health insurance by using something like an HRA (health reimbursement account). Additional meetings will be set up with other companies. The Benefits Committee is exploring incentives for employees to participate in wellness and preventative activities to help reduce costs.