The Affordable Care Act contains a provision–the so-called “Cadillac tax”–providing for a 40% excise tax on high cost employer-sponsored health coverage. The bar for “high cost” is fairly low, and the Cadillac tax is ultimately expected to apply to a significant number of employer-sponsored health plans.
Since the passage of the Affordable Care Act, many employers and insurers (who would be responsible for paying the tax) have actively opposed the implementation of the Cadillac tax provisions, with moderate success. The Cadillac tax was originally slated to take effect in 2018, but its implementation has been delayed twice–most recently until 2022.
Bi-partisan momentum is now building for a full repeal (rather than further delay) of the Cadillac tax provisions of the Affordable Care Act. Senator Martin Heinrich introduced the Middle Class Health Benefits Tax Repeal Act of 2019 in the Senate on March 6, which has already secured 23 co-sponsors (12 Republican, 11 Democrat). Comparable legislation has been pending in the House since January 2019, with similar bi-partisan support (of the 238 co-sponsors, 110 are Republicans and 128 are Democrats).
The implementation of (or repeal of) the Cadillac tax will have a significant impact on employer health plan design. Check back for updates on the status of this important legislation.