USA – Open for Business (Again) – Cadillac Tax Delayed (Again) until 2022
While we all may not wish to applaud Congress today, many Employers and Plan Sponsors have something to be grateful for. The leaders of the U.S. House of Representatives included a two-year delay of the 40% “Cadillac Tax” in their proposal to continue funding the government until February 8, 2018. This two-year delay will push the effective date for the “Cadillac Tax” to 2022, and will help to protect health care coverage for the more than 178 million Americans with employer-sponsored health insurance.
“We applaud efforts to delay the ‘Cadillac Tax’ that is driving up health care costs for millions of Americans,” said James A. Klein, President of the American Benefits Council. “Employer-sponsored health coverage is efficient, effective, and stable. We will continue our efforts to fully repeal this onerous tax that forces employers to reluctantly cut benefits and increase out-of-pocket costs for employees in an attempt to avoid it. We appreciate Congress including this two-year delay as a down payment for full repeal.”
“Employers create innovative and cutting-edge benefit plans to help maintain a healthy workforce. Taxing these benefits could compel employers to stop offering wellness programs or on-site clinics and ultimately drive up costs for workers and employers, alike,” said Klein.
The Cadillac Tax imposes an annual 40 percent excise tax on plans with annual premiums exceeding $10,800 for individuals or $29,500 for a family. The Council of Insurance Agents and Brokers (CIAB) continues to strongly advocate for legislation that exclusively repeals the Cadillac Tax as championed by Senators Dean Heller (R-NV) and Martin Heinrich (D-NM), and Representatives Mike Kelly (R-PA) and Joe Courtney (D-CT). The major hurdle to the effort continues to be the $87 billion cost associated with the bill, a figure with which The Council and our allies take issue. We will continue to work with our Congressional allies to see a full repeal of the tax.
Repealing the Cadillac Tax is a top legislative priority for The Council and we’re pleased to see the two year delay included in this agreement. The agreement will also delay the medical device tax for two years and the health insurance tax for one year.
Health Insurance Industry Fee (a.k.a. Health Insurer Tax)
The short-term spending bill also suspends the Health Insurance Industry Fee for 2019. This fee began in 2014 and only affects fully-insured health plans. It was previously suspended for 2017, but went back into effect on Jan. 1, 2018.
Medical Device Tax
Previously suspended for 2016 and 2017, the 2.3% excise tax on U.S. medical device revenues also restarted on Jan. 1, but will now remain suspended for two years through the end of 2019.