Cadillac Tax Analysis

This analysis will review the potential tax effect of Internal Revenue Code (IRC) Section 4980I Excise Tax on High Cost Plans (Cadillac Tax) on the current plan design offerings of the client. The analysis will show the potential tax liability and offer alternative solutions to avoid or mitigate the tax including a year-by-year strategy. Conducting this analysis in advance of the implementation of the excise tax allows for organizations to develop a multi-year strategy to address the cost impact and avoid making dramatic changes all in one year.

Service Features:

  • Review benefit plans and premiums / COBRA rates that are considered applicable coverage under IRC Section 4980I.
  • Collect census and enrollment information / utilization by plan.
  • Develop necessary assumptions to make projections (trends, utilization, etc.)
  • Analyze and create projections for two scenarios:
    • Current plan design and;
    • Assuming all plans are transitioned to an Exchange (Marketplace) Bronze level plan, to assess impact on excise tax.
  • Review IRC Section 4980I including any Internal Revenue Service (IRS) guidance or regulations.
  • Conduct analysis of potential tax liability in aggregate and by plan.


  • Report detailing the cost projection by medical plan offering showing potential cost and comparison against the excise tax limits and the potential tax liability through 2025.
  • Review of options to mitigate risk of excise tax in the future including a glide path from current year benefit offerings. 
  • Includes 2-hour meeting with client to review results.

Neither American Fidelity Assurance Company nor American Fidelity Administrative Services provides tax or legal advice and, given the complexity of these laws, we always recommend working with your legal counsel on how the laws impact your specific situation.