House lawmakers overwhelmingly passed legislation to repeal the Cadillac tax, the Affordable Care Act's tax on high-cost health plans 419-6
What is the Cadillac Tax?
The Cadillac Tax, which was part of the Affordable Care Act law, would require plan sponsors and insurers to pay a 40% excise tax on the excess cost of employer-sponsored health coverage for employees — amounts over $11,100 for employee-only and $29,750 for family coverage, adjusted for inflation annually.
The Cadillac Tax will be repealed effective in the 2022 tax year. H.R. 748, titled the Middle Class Health Benefits Tax Repeal Act, received bipartisan support for killing the excise tax, as industry groups and labor unions have become vocal in its repeal over the years since the healthcare law’s passage.
The Tax was designed as a disincentive to encourage self-funded and fully-insured employers to spend less per employee and employee + dependents. It caused employees to pay more out-of-pocket.
An analysis of the so-called Cadillac tax by The Kaiser Family Foundation, concluded that 21% of employers offering health benefit plans would be affected by the tax when it went into effect in 2022 — and the number of employers would increase to 37% by 2030.
At SurgeryShopper.com, we interviewed Maria Todd, author of the forthcoming Employer’s Guide to Medical Tourism Benefit Design, who stated that she always felt this flawed tax was supported by logic that was misguided. “ERISA already has rules built in that cause plan fiduciaries to conserve trust dollars and also decide on services and benefits that put the interests of plan participants as the focal point of decision-making. An excise tax of this nature and magnitude risked punishing employers for doing their level best by employees to arrange high-quality care that might cost more than mediocre care.” Now all that’s left is for the Senate to sign off.