Benefits alliance braces for fight against ‘Cadillac tax’

We’ve already seen legislation introduced with the sole purpose of getting Obamacare’s controversial “Cadillac tax” tossed. Now an impressive alliance has come together to put pressure on Congress to make sure that repeal actually takes place.  

The group, which consists of more than two dozen public and private employers, insurers and unions, calls itself the Alliance to Fight the 40, a reference to the 40% excise tax imposed by the ACA.

Under the ACA’s Cadillac tax provision, employers will be required to pay a 40% excise tax on the value of any healthcare coverage that exceeds $10,200 for single coverage or $27,500 for families in premium costs starting in 2018.

Since the passage of the Affordable Care Act back in 2010, the Cadillac tax has been one of the most worrisome provisions for employers — and with good reason. Research has shown that a significant number of firms are on pace to trigger the tax in 2018.

For the feds, however, the excise tax is expected to be a major revenue generator. In fact, the Congressional Budget Office estimated that the Cadillac tax will raise $87 billion in the decade after it takes effect. The feds then plan on using this money to fund other key parts of the ACA — e.g., the subsidies for low- and middle-income families on the insurance marketplace.

‘Hits ordinary plans’

The repeal of the excise tax seems to be one of the few components of the healthcare reform law where everybody — Democrats and Republicans, public and private employers, etc. — seems to be on the same page: staunchly opposed to the provision taking effect.

As James A. Klein, president of the American Benefits Council and a member of the Alliance to Fight the 40, put it:

“The 40% tax hits ordinary plans that are expensive simply because they cover many people with high health costs — women, older and disabled workers and families with catastrophic health events.”

It’s also worth noting that many experts believe the repeal of the Cadillac tax is all but inevitable. Example: During “How to Promote a Healthy Workforce Under the ACA Without Breaking the Bank,” a presentation at the 2015 SHRM Conference & Exposition that HR Benefits Alert attended, employment attorney Mark Boxer said he believed there was about an 80% chance the Cadillac tax would be repealed before 2018.