Politicians agree on repealing Cadillac Tax

From Employee Benefit Provider Magazine, 4/30/15:

There’s plenty of disagreement between Democrats and Republicans when it comes to the Affordable Care Act. However, there is one aspect that members of both parties agree on — the Cadillac tax should be repealed.

The most recent effort to repeal the tax was announced this week, and the bill is co-sponsored by three Democrats. Reps. Joe Courtney (D-Conn.), Dina Titus (D-Nev.) and Donald Norcross (D-N.J.) unveiled the Middle Class Health Benefits Tax Repeal Act, which would repeal the excise tax on high-cost group plans. Set to take effect in 2018, employers would have to pay a 40% tax on plans exceeding $27,500 for a family or $10,200 for an individual.

Bipartisan support for the repeal has been in the works for a  while now, says Joel Kopperud, vice president of government affairs at the Council of Insurance Agents and Brokers. “Everyone is working together on this,” he says.

That includes employers and unions — which is fueling the bipartisan effort from Congress, says John Greene, vice president of congressional affairs at the National Association of Health Underwriters. “When you get the rare combination of union and employer discontent with something, then they tend to act,” he says.


However, the Democrats’ bill and its Republican counterpart — H.R. 879, which was introduced by Rep. Frank Guinta (R-N.H.) in February — each have partisan co-sponsors, Kopperud says. Having support from the House Ways and Means Committee and the Senate Finance Committee would boost momentum, he says.

It’s unlikely a repeal or amendment to the Cadillac tax will happen this year, Kopperud says, but he’s hoping Congress will move quickly. Employers already are — 31% said avoiding the tax influenced their plan decisions for 2014, according to a Mercer study. “It is impacting plans now,” says Kopperud. “The market is reacting today.”

Some employers are scaling back benefits and/or increasing employee contributions, says Ronnell Nolan, president of Health Agents for America, Inc. “Businesses have been pushing their workers out of high-cost plans and into ones with higher deductibles while simultaneously offering them HSAs to help them cope with the increased costs,” she says. “Many employers are also considering significantly cutting how much they subsidize the health benefits of spouses or dependents of workers.”