Earlier this year, the IRS issued a 24-page notice requesting comments by May 15 in advance of regulatory guidance for the excise tax on employer-sponsored health coverage. Last week, in addition to sending its own official comments to the IRS regarding the Affordable Care Act’s (ACA) controversial “Cadillac” tax or excise tax, the Big “I” also joined 22 other organizations in sending a joint letter.

The organizations represent a diverse group of public- and private-sector employers, unions and other entities that support employer-sponsored health coverage and have concerns with this tax. The Big “I” will continue to participate in such requests and advocate against this damaging provision.

Beginning in 2018, the ACA will impose a 40% tax on health benefits that exceed an established annual cost. Over time, this tax will impact more and more individuals because Congress tied the threshold to a slow measure of inflation that will not keep up with the rising cost of health care. The threshold will increase by the Consumer Price Index (CPI) plus 1 for the first two years, 2018 and 2019, and then just by the CPI thereafter.

According to a March survey by Mercer, a benefits consulting firm, about one-third of employers will face the tax in 2018 if they do nothing to change their plans. By 2022, almost 60% will face the levy. As a result, although this provision of the ACA is billed as a tax on high-cost plans, it will have a huge impact on middle-income Americans.

The tax will cause an increase in health insurance costs for both employers and employees and a significant decrease in the quality of health insurance coverage for many employees as employers are forced to reduce benefits to avoid this tax increase. The Brookings Institution recently drew attention to the financial impact this tax will have on cities and towns as the health care plans of many local governments will also face the tax in 2018.

Wyatt Stewart is Big “I” director of federal government affairs.