The Cadillac Tax is coming in 2018. – All “premiums” over the designated amounts, currently set at $10,200 for single coverage and $27,500 for family coverage, will be taxed at 40%.

BUT, the IRS and DOL are currently counting employee contributions into their own HSA’s as “premiums”.

So, if you are being a responsible healthcare consumer, choosing a high deductible plan and putting dollars into an account in order to pay medical expenses, those dollars, if pre-taxed in an employer’s Section 125 Plan, will now count against you!

If the IRS does adopt rules requiring employers to include employees’ pretax HSA contributions in calculating plan costs, employers are likely to redesign their high-deductible plans, such as capping pretax contributions or allowing only after-tax contributions to reduce the likelihood of triggering the excise tax.

Thanks to Susan Luskin, FLMI, CLU, CEBS, RHU, ChHC, Diversified Administration Inc,, for pointing this out.