This is that 40% excise tax on so called “cadillac plans”. It works to punish employers who want to give employees more benefits. It’s a huge penalty so the employers really have no choice but to cut benefits.

No one is allowed better plans, all must fit in the government cookie cutter plan.

Via Daily Caller:

The University of Minnesota had to make its healthcare plans worse in order to avoid Obamacare-related penalties.

The Affordable Care Act levels an excise tax on high-value health coverage plans, and UM would have to pay $48 million with its existing plans. Instead, the university is lowering the quality of its coverage.

“The Office of Human Resources announced in a July email that it was making changes to the UPlan, the employee healthcare program, including adding a deductible and increasing copays for primary and specialty care,” according to the Minnesota Daily. “The email said the cost increases were necessary to help the University avoid a $48 million excise tax in 2018.”

UM employees weren’t pleased with that deal, noted Campus Reform. But after UM offered a three percent salary increase, the union reluctantly agreed.

“This isn’t the deal the table committee wanted; it is better than what the University management committee had been proposing and better than what most other employee groups received,” said the union in a statement.

The deal has not yet been approved by UM’s Board of Regents, however.

UM did not immediately respond to a request for comment.