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'Cadillac Tax' Repeal Law Introduced In US Senate

by Mike Godfrey, Tax-News.com, Washington

22 September 2015


On September 17, Dean Heller (R – Nevada) and Martin Heinrich (D – New Mexico) introduced bipartisan legislation into the US Senate to repeal the Affordable Care Act's (ACA's) "Cadillac" excise tax to be imposed on high-value employer-sponsored health insurance plans from 2018.

The ACA provides for a 40 percent tax on the "excess benefit" of health insurance plans paid for by employers in tax years beginning after December 31, 2017. The tax kicks in when a plan's annual premium cost exceeds USD10,200 for individuals and USD27,500 for families.

The Senate bill provides a companion to legislation introduced by Joe Courtney (D – Connecticut) earlier this year in the House of Representatives that would also cancel the controversial tax, which has attracted questions from both employers and employees on its future operation.

"The reality is that in 2018, middle-class Americans will face a costly healthcare tax," said Heller. "This tax will reduce benefits, increase costs of premiums and deductibles, and limit healthcare choices. … My hope is that reasonable Members of Congress on both sides of the aisle will join us in this important, bipartisan endeavor to protect middle-class Americans."

"Doing away with this onerous tax on employees' health coverage before it goes into effect will protect important benefits for workers and ensure businesses and families get a fair deal," Heinrich continued. "I'm proud to join Senator Heller and Congressman Courtney in leading this bipartisan effort to ensure millions of middle-class families who rely on employer-based health care aren't unfairly penalized because of this tax."

Courtney added that "the impacts of the excise tax are becoming clearer as businesses, workers, and municipalities grapple with benefits planning today in advance of the 2018 deadline. Actuaries and experts have concluded that the tax will unfairly target older workers, women, and families in expensive geographic areas."

Several recent surveys have also pointed to the new tax's unpopularity. A poll by Morning Consult last month showed that a majority (65 percent) of US registered voters want Congress to either repeal or reform the tax, while an earlier survey released by the National Business Group on Health reported that 48 percent of employers expect at least one of their benefit plans to hit the excise tax threshold in 2018 if they do not take action to reduce costs.

TAGS: individuals | tax | business | law | insurance | employees | excise duty | health care | legislation | United States

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