State and local governments will need to account for federal taxes on future retiree health benefits when calculating their liabilities, according to a consensus reached by accounting rule makers.
The so-called "Cadillac" tax imposed by the Patient Protection and Affordable Care Act, commonly referred to as Obamacare, will cost 40 percent of premium costs in excess of $10,200 for individual coverage and $27,500 for coverage of more than one person. The tax, which goes into effect in 2018, also has built-in protection in case health care costs rise faster than expected.
The Governmental Accounting Standards Board reached a consensus last month that state and local governments should include future taxes when calculating their liabilities for retiree healthcare, often called other post-employment benefits or OPEB.
GASB plans to finalize new OPEB rules in 2015. The consensus on including future taxes in long-term liability calculations will be part of the new rules.