The Alliance to Fight the 40, of which NAHU is a member, joined with 665 organizations in sending letters to the Senate Finance Working Group and House Ways and Means Committee urging full repeal of the Cadillac/excise Tax. The House legislation, H.R. 748, currently has 345 co-sponsors, well beyond the threshold of 290 for a vote on the House floor. Representative Joe Courtney (D-CT), the primary sponsor of the bill, signed a petition to advance the legislation according to the chamber’s rules and testified before the Ways and Means Committee to quickly move the legislation. House Speaker Nancy Pelosi (D-CA) has indicated a commitment to bringing a bill to the floor before August recess.
The Senate companion legislation, S. 684, is continuing to garner support with 37 bipartisan co-sponsors. Last week, the Alliance submitted a comment letter to the Senate Finance Committee’s bipartisan Health Taskforce urging them to consider fulling repealing the “Cadillac Tax” as part of the Committee’s review of temporary tax provisions. The current bipartisan working groups are limited to items that are expiring in 2019 or already expired and do not include the Cadillac tax. NAHU and our coalition partners are working closely with the healthcare working group members and co-chairs to encourage them to recommend the full-repeal of the Cadillac tax as part of their process.
The Cadillac Tax calls for 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, which will be adjusted annually, initially to the Consumer Price Index 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 the enormous compliance burden that the tax creates. It is estimated that as many as 60% of employers will be hit when the tax is due to take effect in 2022. Because of the projected wide reaching effect of the tax, 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 Cadillac Tax has been twice delayed, after the enactment of NAHU-supported measures and in 2015 and 2018. We strongly support legislation that will fully repeal this tax, prevent any additional cost-shifting onto employees or the cancellation of group coverage altogether as employers seek relief from the impending tax, and provide immediate relief for Americans who receive employer-sponsored insurance.