Excise Tax on High-Cost Insurance Plans

Excise Tax on High-Cost Insurance Plans—Tax Years Beginning 2018 or Later. Insurers will face a 40 percent excise tax on health coverage with premiums in excess of $10,200 for an individual or $27,500 for family coverage. These thresholds are increased to $11,850 for individuals or $30,950 for families in the case of retirees over age 55, electrical or telecommunications repairmen, law enforcement or fire protection workers, out-of-hospital emergency medical providers, and those engaged in the construction, mining, agriculture, forestry, and fishing industries. Thresholds are subject to adjustment for an unexpected increase in medical costs prior to the effective date, and will be indexed for inflation by the consumer price index plus 1 percent, with additional adjustment based on age and gender profiles of covered employees. The tax is levied at the insurer level, with employers aggregating and reporting information for insurers indicating the amount subject to the excise tax. This will yield an estimated $12.2 billion in 2018 and $32 billion total over 2018–2019.

Source: The Common Wealth Fund

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