House Passes Full Repeal of ACA’s Cadillac Tax

Posted on July 18, 2019

NAHU Update
7/17/19 at 9:25 PM

The House of Representatives voted 419-6 to pass H.R. 748, NAHU-supported legislation to fully repeal the ACA’s Cadillac/excise Tax. It will next be considered by the Senate, where a companion bill, S. 684, has 42 bipartisan co-sponsors. NAHU and our partners in the Alliance to Fight the 40 have long called for fully repealing the tax, and urge the Senate to quickly advance this legislation to President Trump. We appreciate the significant grassroots efforts by our members and your clients who took part in Operation Shout and by directly lobbying lawmakers in Washington, D.C. or in district that allowed H.R. 748 to quickly attract more than 360 co-sponsors. We will continue to need your help in the coming weeks to urge the Senate to pass this legislation and provide immediate relief for Americans with employer-sponsored insurance coverage.

If not fully repealed, the Cadillac Tax would impose a 40% excise tax on the amount of the aggregate monthly premium of each primary insured individual that exceeds the year’s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. While designed as a disincentive for employers offering the most benefit-rich plans, in reality the tax will impact a majority of plans, including those that aren’t benefit-rich and were not the intended targets of this provision. 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 tax has been twice delayed, after the enactment of NAHU-supported measures in 2015 and 2018. While we appreciate these delays, a full repeal is needed to prevent additional cost-shifting onto employees or the cancellation of group coverage altogether. Employers make plan decisions well in advance of a coverage year, and looming proposed rules and continued delays have a direct impact on plan decisions that are being made now for the next several coverage years.