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Cadillac Tax Put Off Till 2022; Opponents Call a Big Win

News  |  By Gregory A. Freeman  
   January 29, 2018

Hefty tax on generous health plans delayed two years. A repeal may be more likely than ever.

The tax on top-tier health plans offered by employers was delayed in the spending deal that recently ended the government shutdown, with opponents saying this is a major achievement and a step toward eliminating it altogether.

Congressional leaders and President Trump reached a deal that includes a two-year delay for the Cadillac tax, a component of the  Affordable Care Act that levies a 40% tax on generous health plans offered by employers. The tax is supposed to prevent overuse of the health system by discouraging employers from giving workers health insurance plans so generous that they seek healthcare services too freely.

Related: Tax Bill Means More Americans Subject to ACA Cadillac Tax

The tax has been opposed by unions, employers, and consumer groups, and with this most recent change it won't go into effect until 2022.

Alliance to Fight the 40/Don't Tax My Health Care has strongly opposed the tax and applauded Congressional leaders for including the two-year delay. The move will help to protect health care coverage for the more than 178 million Americans with employer-sponsored health insurance, says James A. Klein, president of the American Benefits Councilpart of the coalition. 

“We applaud Congress for delaying the 'Cadillac Tax' that is driving up health care costs for millions of Americans," Klein says. “Employer-sponsored health coverage is efficient, effective, and stable. Taxing health benefits would compel employers to stop offering wellness programs and on-site clinics and to reluctantly ask employees to bear higher out-of-pocket costs. We will continue efforts to fully repeal this onerous tax and appreciate that Congress has passed this two-year delay as a down payment for full repeal.”

Klein notes that repealing the tax has strong bipartisan, bicameral support led by Sen. Dean Heller (R-NV), Sen. Martin Heinrich (D-NM), Rep. Mike Kelly (R-PA), and Rep. Joe Courtney (D-CT).  

Gregory A. Freeman is a contributing writer for HealthLeaders.

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