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Congress Delays Cadillac Tax on Employer Health Plans

By Stephen Barlas
April 1, 2018
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Congress gave the business community another major tax victory when it included in the January 2018 continuing resolution—which sets temporary annual federal budgets—a delay of the 40% so-called “Cadillac tax” on employer-sponsored health coverage from 2020 to 2022.

 

The Cadillac tax on company health insurance above certain levels was included in the Patient Protection and Affordable Care Act of 2011. The tax never went into effect, and business groups have pushed for its elimination—an unsuccessful effort so far—because of the negative impact it would have on employer health insurance. That negative impact might include, according to the ERISA Industry Committee, “driving up out-of-pocket health care costs for employees and their families, risking disruption to the system.”

 

Already there’s support in the U.S. House of Representatives for fully repealing the tax. More than half of all House members are cosponsoring the “Middle Class Health Benefits Tax Repeal Act of 2017” (H.R. 173), meaning that, if voted on, it’s virtually guaranteed to pass. The Senate voted 90-10 in December 2015 to completely and permanently repeal the Cadillac tax.

 

Stephen Barlas has covered Washington, D.C., for trade and professional magazines since 1981 and since 1984 for Strategic Finance and its predecessor Management Accounting. You can reach him at sbarlas@verizon.net.
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