The Patient Protection and Affordable Care Act of 2010 created an annual 40 percent excise tax on high value health insurance plans with annual premiums exceeding $10,200 for individuals or $27,500 for families. Designed to begin in 2018, the tax, to be paid by employers and insurers, became known as the high-cost plan tax, or “Cadillac Tax.” The tax is expected to significantly increase costs for employers, including insurance companies, with some experts estimating 25% of small firms (3-199 workers) and 46% of large firms (200-more workers) will have at least one plan hitting the threshold in just the first year of implementation. Tied to rising healthcare costs, these numbers are expected to only increase.
Many employers have already begun making changes to the way they administer health benefits in anticipation of the Cadillac Tax implementation. These changes include:
Capping or in some cases removing from their plans tax-preferred savings accounts likes HSAs
Using different or more inexpensive providers
Removing some services
Eliminating the more expensive plans
In December of 2016, the massive “Omnibus” spending bill and tax extension package, which contained several wins for the property/casualty industry, included a provision that delays the implementation of the Cadillac Tax for another two years, moving implementation to 2020. The delay, supported by NAMIC, will give employers, including insurance companies, more breathing room to take proactive steps before the tax is implemented.
With the election of President Donald Trump, the future of all provisions of the ACA are precarious at best. The central theme of the congressional Republicans since passage of the legislation has been to repeal the ACA. Now with the majority in both chambers of Congress and a Republican administration, Republicans are poised to repeal the Affordable Care Act. The House of Representatives has already passed legislation that would repeal many of the provisions of the ACA including the Cadillac Tax.
NAMIC is opposed to arbitrary taxes on generous healthcare plans. Employers offer their choice of health benefits to all employers without regard to salary or position. Imposing a tax such as the Cadillac Tax punishes hard working Americans of all economic status with the fortune of receiving high quality health benefits from their employer. Employers should be allowed to offer their employees the best healthcare possible without onerous and excesses taxes for doing so.