The IRS recently released guidance on the excise tax (also known as the Cadillac Tax) that will be imposed on employers that offer high-cost health coverage. Notice 2015-16 discusses the purposes of the Cadillac Tax and defines and describes terms that are relevant in determining whether the tax is imposed and the amount of the tax. Section 4980I takes effect January 1, 2018. It is designed to raise revenue to offset other costs of the PPACA by imposing a 40% excise tax on any “excess benefit” of applicable coverage provided to an employee by an employer that is excludable from the employee’s gross income. The excise tax is not deductible and is not taken into account for purposes of determining the cost of applicable coverage. If the excise tax is imposed, it must be paid by the insurance provider for insured plans, the employer in the case of certain arrangements such as a Health Savings Account (HAS), or the plan administrator. The tax will be imposed on the amount of coverage the employee receives that is over the applicable dollar limit for the month. For 2018, the applicable dollar limit is $10,200 for self-only coverage, and $27,500 for coverage other than self-only coverage. The applicable dollar limit will be adjusted yearly to reflect cost-of-living changes. Additionally, the limit may be adjusted for individuals who are qualified retirees and for individuals engaged in certain high-risk professions.