Thursday, July 18, 2019
On Wednesday afternoon, the House approved the Middle Class Health Benefits Tax Repeal Act of 2019. After two votes to delay the implementation of the ACA’s “Cadillac tax,” on high-dollar employer-sponsored health insurance plan, the House has voted to repeal the provision altogether. The Cadillac Tax was originally intended to take effect in 2013, but was immediately delayed until 2018. It saw two further delays bringing it out to 2022. Fortunately it looks like it will officially go away because it would be very expensive for companies to absorb and would have a significant impact on employees in regards to both benefits and employee contributions.
The next step is to make it through the Senate. A Senate version of the bill has more than 40 co-sponsors and bipartisan support urging them to promptly approve the measure and send it to the president for signature.
The 40 percent tax, which would be based on general inflation instead of the more rapidly increasing medical inflation, was originally only intended to target high-value plans, but modest plans will also be impacted. The provision taxes the amount, if any, of which the monthly cost of an employee’s employer-sponsored health coverage exceeds the annual limitation (called the employee’s excess benefit). This means in order to prevent additional taxation, millions of Americans and their families would face higher copays and deductibles shifting a greater share of the financial burden of health care onto the employee.
As always, we will keep you informed on any developments as this bill hopefully makes its way through the Senate to the president’s desk.