Cadillac Tax Delay Advocacy A Success

Cadillac Tax Delay Advocacy A Success

Employers can find relief in a two-year delay to the start of the unpopular excise tax on group health premiums known as the “Cadillac Tax”. BPC’s largest policy concerns in 2015 were related to the looming impact of the tax. BPC’s CEO, Habeeb Habeeb, along with other industry leaders, spent time in Washington D.C. meeting with members of Congress on both sides of the aisle, explaining the need for repeal or reform of this potentially harmful tax.  The 40% excise tax on the value of health coverage exceeding certain thresholds was set to go into effect in 2018.  Estimates ranged widely across different studies and surveys, but overwhelmingly found that the tax would impact a broad range of employers in the U.S.

On December 18, the House of Representatives and the Senate passed, and the President signed into law, a large spending and tax bill that delays the start of the Cadillac Tax from 2018 to 2020.

At worst, this move buys extra time for employers to prepare for its impact in 2020. But it could do more than that.  The postponement could also signal repeal or significant reform.  The tax is unpopular across most industries in the U.S., with businesses and unions concerned about its effects on employers and employees. A recent Senate amendment to repeal the tax passed 90-10, signaling just how strongly Congress opposes the tax.  By pushing the effective date to 2020, Congress will have ample time to pass repeal or reform legislation and put it in front of our next President.  While President Obama would be likely to veto a full repeal, his successor could feel differently.  

Nearly all of the current Presidential candidates have signaled a desire to repeal the Cadillac tax, and none of them are bound, like the current President, to past promises to veto major changes to the Affordable Care Act.  If Congress maintains its position, and those candidates maintain their positions, it could mean the tax never takes effect, which will preserve freedom for employers to offer a broad range of health coverage options to their employees, without fear of reprisal for generosity.  

BPC will continue to advocate for the repeal of the Cadillac Tax and keep you posted on further progress.


Posted on January 7, 2016 .