Internal Revenue Service (IRS) Notice 2015-16 was an initial request for comments regarding the excise tax on high-cost, employer-sponsored health coverage (commonly referred to as the 'Cadillac tax') enacted as part of the Patient Protection and Affordable Care Act 2010 (for further details please see "Steering the Cadillac tax: an opportunity for employers and other stakeholders"). IRS Notice 2015-62, which was released at the end of July 2015, provides employers and other stakeholders with an additional opportunity to comment on specific issues in advance of the Cadillac tax implementation.

Notice 2015-62

Notice 2015-62 addresses five additional issues related to the Cadillac tax:

  • the coverage provider liable for the Cadillac tax, and specifically the determination of the "person that administers plan benefits" when such person is liable for any applicable Cadillac tax;
  • the employer aggregation rules to be applied when identifying:
    • the applicable coverage made available by the employer;
    • the employees taken into account when making applicable age and gender adjustments;
    • the taxpayer responsible for calculating and reporting the excess benefit; and
    • the employer liable for any penalty for failure to properly calculate the Cadillac tax;
  • the cost of applicable coverage:
    • the determination period for calculating the cost of applicable coverage;
    • the exclusion from applicable coverage of amounts attributable to the Cadillac tax;
    • the proper allocation of contributions to health savings accounts, Archer medical savings accounts and flexible spending accounts (FSAs) when determining the cost of applicable coverage;
    • the determination of the cost of applicable coverage under FSAs with employer flex credits; and
    • the inclusion in applicable coverage of self-insured coverage includible in an employee's gross income;
  • the age and gender adjustments to the dollar limit used when determining whether coverage is subject to the Cadillac tax; and
  • the notice and payment rules applicable when coverage is subject to the Cadillac tax.

For some issues, Notice 2015-62 requests comments on specific approaches under consideration by the IRS. For example, Notice 2015-62 describes two possible categories of person that administer plan benefits:

  • the person responsible for performing the day-to-day functions that constitute the administration of plan benefits; or
  • the person that has the ultimate authority or responsibility with respect to the administration of plan benefits.

Because the person that administers plan benefits will have direct liability for any applicable Cadillac tax, persons in each category have a stake in the approach ultimately chosen by the IRS.

For other issues, Notice 2015-62 does not identify the specific approaches under consideration, but instead requests comments more generally. For example, an employer must:

  • calculate for each taxable period the amount of any excess benefit subject to the Cadillac tax and the applicable share for each coverage provider; and
  • notify the IRS and each coverage provider of the amount so determined.

Notice 2015-62 requests comments on the administrative and other issues raised by these requirements which potentially affect employers and other stakeholders.

Next steps

The Cadillac tax is effective for taxable years beginning after December 31 2017. Notice 2015-62 provides another valuable opportunity for stakeholders to comment on their concerns and preferred approaches to the Cadillac tax well in advance of its implementation. The IRS has requested that any such comments be submitted no later than October 1 2015.

For further information on this topic please contact Joanne C Youn at Caplin & Drysdale, Chartered by telephone (+1 202 862 5000) or email ( The Caplin & Drysdale, Chartered website can be accessed at

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