The House of Representatives overwhelmingly voted 419-6 on Wednesday to pass H.R. 748, NAHU-supported legislation to fully repeal the ACA’s Cadillac/excise Tax. It will next be considered by the Senate, where a companion bill, S. 684, has 42 bipartisan co-sponsors. NAHU, along with our partners in the Alliance to Fight the 40, have long called for fully repealing the tax, and urge the Senate to quickly advance this legislation to President Trump.
The Cadillac Tax would impose a 40% excise tax on the amount of the aggregate monthly premium of each primary insured individual that exceeds the year’s applicable dollar limit. Starting at $11,100 for individual coverage and $29,750 for “other than self-only” coverage, it will be adjusted annually, initially to the Consumer Price Index (CPI) plus 1%, and then simply to CPI. Given that the pace of medical inflation is well beyond that of general inflation, the tax is destined to outgrow itself in short order and many employers will be impacted by the cost of the tax and its enormous compliance burden. While designed as a disincentive for employers offering the most benefit-rich plans, in reality the tax will impact a majority of plans, including those that aren’t benefit-rich and were not the intended targets of this provision. Many employers may be deterred from offering coverage, including HSA-compatible plans, wellness programs or onsite clinics.
Originally set to take effect in January 2018, the tax has been twice delayed, after the enactment of NAHU-supported measures in 2015 and 2018. While we appreciate these delays, a full repeal is needed to prevent additional cost-shifting onto employees or the cancellation of group coverage altogether, as employers continue to face uncertainty in anticipation of federal rulemaking to implement the tax as scheduled. Employers make plan decisions well in advance of a coverage year, and looming proposed rules have a direct impact on plan decisions that are being made now for the next several coverage years.
NAHU appreciates the significant grassroots efforts by our members and your clients who took part in Operation Shout and by directly lobbying lawmakers in Washington, D.C. or in district to support this legislation, allowing H.R. 748 to attract more than 360 co-sponsors in such a short time period. We will continue to need your help in the coming weeks to urge the Senate to advance this legislation and provide immediate relief for Americans with employer-sponsored insurance coverage. |
