Mercer Comments on 'Cadillac Tax'; Embedded OOP Limit in 2016

Mercer filed comments last week with the IRS making recommendations about implementation of the ACA’s 2018 “Cadillac” tax on high-cost health plans. While noting that only Congress can make certain changes to the tax, Mercer is urging the IRS to ease its impact by issuing rules that exclude noncore medical benefits (like EAPs and some on-site medical clinics) and offer flexibility (within parameters) in calculating coverage costs subject to the tax. Given the tax's complexity, Mercer also asks that the IRS rules provide a delayed effective date or a good-faith compliance period. IRS is expected to ask for additional comments on the excise tax before proposing regulations.

Regulators confirmed last week that even self-insured and large-group insured nongrandfathered health plans must “embed” individual in-network out-of-pocket (OOP) limits in family coverage. No formal guidance for self-insured and large-group plans is expected to address this ACA issue, so plan sponsors need to decide whether to implement design changes conforming to this informal guidance for 2016.

In addition, new FAQs clarify specific preventive services that nongrandfathered plans must cover without cost-sharing.