March 20, 2014

City may have to pay "Cadillac tax" on its health care for employees

The health insurance plan the city offers to its employees is so lucrative that it may have “to pay some kind of tax” for providing excessive benefits, according to Board of Finance Vice Chairman John Smith.
The so-called “Cadillac tax” is supposed to help the federal government raise money for the subsidies provided by Obamacare for people who can’t afford to cover the tab for required health insurance.
“We have to be prepared,” Smith said.
Smith said the penalty the city may have to pay could be revised if the legislation is overhauled, but it’s possible the government may be eager to get more money to shore up Obamacare plans given the likelihood that people with major maladies will sign up in greater numbers than healthy adults.
Smith said it would be up the city, as the employer, to pay the tax on its lucrative health care package for employees.
But, he said, officials will try to negotiate with city unions to try to reduce the impact.
At this point, it’s not clear how much the city might be on the hook for.

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