Officials Concerned About ACA and Public Employee Health Benefits

High-value public employee health insurance plans will be subject to a 40 percent tax within the coming decade, leaving local and state officials unsure how this will affect their budgets.

The so-called Cadillac tax will trigger in 2018 on plans worth more than $10,200 (individuals) and $27,500 (families). The tariff was included in the 2010 Affordable Care Act as a way of slowing long-term increases in healthcare costs. What has municipal officials concerned, however, is the impact the tax will have on their budgets. Some have raised the possibility that policyholders will pay a portion of the charge.

The impact of the Cadillac tax was raised yesterday during a panel discussion of how reforms in federal healthcare and state health benefits will affect municipalities. The panel was part of the New Jersey League of Municipalities’ annual conference in Atlantic City. The Cadillac tax thresholds are scheduled to grow at the rate of inflation. Since the rise in health insurance costs typically outpaces inflation, it’s expected that more health plans will be affected by the tax over time.

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