The “Cadillac” tax that was part of the Affordable Care Act, and which was scheduled to take effect in 2020, has been pushed back two years. Many in Congress now want it repealed altogether.
The 40% excise tax is on annual health care premiums that are over $10,200 for single and $27,500 for family coverage. The tax was strongly opposed by employers and trade organizations, citing it as unfair to many working in areas where health care premiums are above average or to employers that have older work forces.
Lawmakers had already rolled back original implementation of the tax set for 2017. Now that President Trump has signed into law another extension as part of the latest continuing budget reconciliation, many on Capitol Hill feel it’s time to repeal it permanently. H.R. 173, co-sponsored by 273 congressmen, would do away with it. This comes after a survey by the International Foundation of Employee Benefit Plans found that 77.3% of public-sector employers and two-thirds of private sector employers said they would be hit with the excise tax if they didn’t change plans and benefits.
In addition to the delay of the Cadillac tax, the President delayed a 2.3% tax on medical devices that was scheduled for 2018. That tax is now delayed until 2020.
The delay on the Cadillac tax will be good news to most employers and trade unions while they keep their fingers crossed that it will be repealed permanently. We’ll keep you informed of future news.
MBA Benefit Administrators applauds this latest delay and possible repeal. We work hard on behalf of our clients to keep health insurance premiums manageable through partially self-funded plans, and to keep claim costs fair and reasonable through The Open Solution, and reference based reimbursement. For several years now, MBA has proven costs can be beneficially contained and renewals can be held in check – or even flat. Without government interference, Cadillac tax would be an undue slap against those who provide coverage for their employees which could cause a reduction in benefits for those covered under their employers plan.