PIA-Supported Legislation to Repeal the Cadillac Tax Introduced

On January 24th, Reps. Joe Courtney (D-CT), Mike Kelly (R-PA), Suzan DelBene (D-WA), and Elise Stefanik (R-NY) reintroduced the bipartisan Middle Class Health Benefits Repeal Act of 2019 (H.R. 748) in the U.S. House. This legislation would repeal the excise tax on high-cost employer-sponsored health coverage known as the “Cadillac Tax.” PIA National strongly supports this legislation.

Millions of individuals rely on health insurance obtained through employer-sponsored health plans. The provision in the Affordable Care Act (ACA) often referred to as the “Cadillac Tax” would, starting in 2022, impose a 40 percent tax on so-called “overly generous,” high-cost health plans that exceed certain benefit thresholds—currently estimated to be $11,100 for self-only coverage and 29,750 for family coverage.

The reality is that, because the Cadillac Tax is indexed to the chained consumer price index (CPI), over time, more and more employer-sponsored health plans will be impacted by the tax because the benefit thresholds will be increased at a rate slower than that of inflation. This will subject an increasing number of Americans to the Cadillac tax sooner, because inflation will outpace any increase in the thresholds using chained CPI.

PIA National has long sought to prevent this tax from ever being implemented, successfully advocating to delay its implementation twice. Even though the tax will not take effect until 2022, its very existence creates instability in the health insurance market while putting consumers’ health care at risk. PIA National opposes the tax because it will severely damage the employer-sponsored health system and consumers. This bill will be one of our top priorities for the 2019 PIA Federal Legislative Summit.

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