State health plan benefits trigger “Cadillac tax” in 2018, DMS told

The benefits in the state employee group health plan will likely trigger $14.6 million in “Cadillac taxes” under the federal health care law, an actuarial report given to the Department of Management Services and discussed by state economists on Monday shows.

The majority of the tax, or $12.02 million, will be paid by the state for those enrolled in a self-insured insurance product or self-insured HMO. Capital Health Plan — the popular fully insured HMO in Tallahassee — will be on the hook for for $2.3 million in Cadillac taxes and Florida Health Care Plans will be liable for about $120,000.

The Cadillac tax applies when employees are covered under plans that are considered to have excessive coverage benefits. The tax, which becomes effective in 2018, is equal to 40 percent of the amount considered to be an excessive benefit during the taxable period.

There are three categories of employees — or risk groups — in the state group plan: active employees, early retirees who are not eligible for Medicare, and Medicare-eligible retirees. There are 6,500 early retirees who are not Medicare eligible. About 5,300 of those people have an individual plan. It’s that group of insureds who are largely responsible for triggering the tax.

Foster & Foster Actuaries and Consultants prepared the analysis for DMS, Division of State Group Insurance.

The State Employee Health Insurance Revenue Estimating Conference Committee has been examining the effects of the federal health care law on the state group plan.