Senators Introduce Bill to Repeal 'Cadillac' Tax

Earlier today, Sen. Dean Heller (R-Nevada) and Sen. Martin Heinrich (D-New Mexico) introduced legislation that would repeal the Affordable Care Act’s (ACA’s) 40% excise tax, also known as the “Cadillac” tax.

Starting in 2018, the ACA will impose a 40% tax on health benefits that exceed an established annual cost. That year, health plans exceeding $10,200 a year in value for individuals or $27,500 a year for families will be subject to this 40% tax. This tax will impact a greater number of individuals each year while health care costs continue to rise.

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. The Alliance to Fight the 40 predicts that this will lead to a reduction in employer-sponsored coverage and an increase in employee cost sharing—the exact opposite of the ACA’s stated goals. As a result, this tax will be harmful to middle-income Americans across the country.

For these reasons, this is a top priority for the Big “I,” which strongly supports Sen. Heller’s and Sen. Heinrich’s legislation. The introduction of this bipartisan legislation in the Senate marks an important milestone in the effort to repeal this tax.

In addition to the Senate legislation, two related bills exist in the U.S. House of Representatives. Rep. Frank Guinta (R-New Hampshire) has introduced H.R. 879, the “Ax the Tax on Middle Class Americans Health Plans Act of 2015,” and Rep. Joe Courtney (D-Connecticut) has introduced H.R. 2050, the “Middle Class Health Benefits Tax Repeal Act,” both of which would repeal the tax.

Earlier this week, Rep. Courtney penned an op-ed in The Hill newspaper in support of his legislation. The Big “I” has endorsed all three efforts and continues to work as part of the Alliance to Fight the 40 and with both chambers in a bipartisan fashion on this critical issue.

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