Earlier this week, NAHU called on members to take action on our latest Operation Shout to ask Congress to further delay the Cadillac/Excise Tax as they consider additional delays of the Health Insurance Tax (HIT) and the Medical Device Tax. All three of these ACA taxes were delayed in December 2015, with the Cadillac Tax delayed until 2020 and the HIT and Medical Device Tax delayed for one-year each. Employers have already begun planning for these taxes as if they will take effect, and Americans are seeing drastic cuts to their health insurance benefits as a result. While NAHU continues to advocate a permanent repeal of these taxes, we urge Congress to pass a short-term delay as it determines the long-term decisions on these taxes.
Employers are making plan-design decisions years in advance as a way to avoid making drastic changes in their employees’ benefits when the tax is set to take effect. According to a Mercer study, a majority of plans (60%) are projected to be impacted by 2022, and a study by Towers Watson estimates that the tax could hit 82% of businesses by 2023. Many employers will attempt to find ways to avoid paying the tax as much as possible, which could mean offering less generous coverage (part of the intent of the tax) but also shifting the burden onto the employees/consumers of care. This could be through higher co-pays and co-insurance or by making employees pay a greater portion of the premium—trends that we are already seeing even without the tax. The tax would exacerbate this and put greater pressure on already stretched consumers.
Other plan-design changes being considered by employers include making cuts to cost-containing elements like on-site clinics, Health Savings Accounts (HSAs) and Flexible Spending Accounts (FSAs), as the tax takes into account all components of a plan. Employers also have to contend with things outside of the plan’s control like family size, state benefit mandates, geographic rating, age, health status and the size of the employer, meaning that many plans could exceed the threshold without necessarily being benefit-rich. The intent of the tax is to discourage rich benefit plans, but even moderate plans could be subjected, forcing Americans to face greater cost-shifting with each subsequent year.
Additionally, employers with collective bargaining agreements need even greater lead time to plan for benefit changes than traditional employers. NAHU has found that many of these employers have already begun reducing benefits and increasing cost-sharing on employees. Increasing cost-sharing harms lower-income and middle-class Americans the most, as they are least prepared to handle the higher premiums and deductibles, often resulting in delayed treatment that costs more in the long term.
NAHU is calling on Congress to again delay this tax to provide immediate relief for Americans who receive employer-sponsored insurance. You can help us spread the message by taking action:
- Contact your senators and representative. Send an Operation Shout today asking your federal legislators to delay the Cadillac Tax. You can take action here.
- Tell your employer clients to take action. Your employer clients that will be directly impacted by the tax can send the most direct message of why this delay is needed before the end of the year as they plan for the tax to take effect. Tell them to take action here.
- Share your story. As a licensed insurance specialist who works closely with employers to help them understand and comply with the law's requirements, stories from your clients about how they will be impacted by the tax, such as through decreased access to coverage, increased cost-sharing and out-of-pockets costs, and added administrative burdens for compliance, will demonstrate the widespread need for this delay and eventual repeal. We will share your stories with appropriate legislators and staff. You can share your story here.
Take action today and tell your federal legislators to pass a delay of the Cadillac/Excise Tax before the end of the year!