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Obamacare’s ‘Cadillac Tax’ starting to worry employers with generous healthcare plans

October 04, 2013 J

WENATCHEE — Big area employers that offer generous healthcare plans are already studying how a tax created by the Affordable Care Act could result in higher costs or reduced coverage for their employees, starting in 2018.

Counties, cities, school districts and other employers with powerful employee unions could be the most affected.

“I don’t want to say, ‘The sky is falling. The sky is falling,’ because it’s probably not, but if everything stands as it is now, we’re probably going to have some problems to resolve,” Cathy Mulhall, Chelan County administrator, said Wednesday of the so-called “Cadillac Tax.”

A key mechanism for funding Obamacare, the Cadillac tax imposes a 40-percent excise tax on annual healthcare premiums that exceed $10,200 for the individual and $27,500 for families.

The tax is charged only on the portion of the premium that exceeds those thresholds.

Mulhall said that about 18 of the total 406 employees enrolled in county-provided health insurance have health plans generous enough to be affected by the tax, if it were in effect today. But with annual increases in healthcare premiums, virtually all employees would be affected by 2018, when the tax actually takes effect, she said.

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