Recently, the IRS issued Notice 2015-52 requesting additional input on the yet-to-be-proposed Cadillac Tax rules. For those unaware, the Cadillac Tax imposes a 40%, non-deductible excise tax on the cost of health coverage that is over a certain threshold. This deceptively simple description does not begin to uncover the myriad of potential issues, such as…
Who pays the tax?
Well, the “coverage provider” pays the tax. For insured plans, that’s easy: it’s the insurer. For HSAs or Archer MSAs, it’s the employer. But what about a self-funded plan? The statute says it’s the “person that administers the plan benefits.” That phrase is undefined in the statute or really anywhere else.
The IRS is looking at two possible approaches for defining this term. One is to look at a self-funded plan’s third party