Under the Affordable Care Act ("ACA"), there is a provision that imposes an excise tax upon health insurance plans that cost more than $11,200 for the individual employee and $30,100 for employees with a family plan. The ACA included this tax in an effort to deter high cost health insurance plans and to raise revenue for underwriting the Act's provisions which subsidized health insurance for certain medicines. The excise tax has become popularly known as the "Cadillac tax" and was estimated by the Kaiser Family Foundation to affect 21% of the employers in the United States that offer health benefits to their employees. The excise tax under the Act was 40% of the premiums in excess of the cost ceilings of $11,200 and $30,100, respectively. The provision was supposed to take effect in 2018 but has been delayed until 2022.
Generally, employers have opposed the Cadillac tax because it would impose the tax on them, and Unions oppose the tax because they argue that employers would increase copays and deductibles in order to reduce the cost of health insurance to avoid paying the tax. The U.S. House of Representatives, by a vote of 419 in favor and 6 opposed, recently approved an amendment to the ACA to eliminate the Cadillac tax. The repeal effort now moves forward to the Senate for its consideration, but it is unclear when or if the Senate will address the matter.
If you have any questions on this Amendment by the House of Representatives, please feel free to contact one of the attorneys in the Labor, Employment and Employee Benefits Department.