It’s a good day for employer groups and insurers!
On July 16, the U.S. House of Representatives approved the repeal of the “Cadillac Tax” after being delayed twice by the House. The Excise, or more commonly called Cadillac Tax, is a provision of the Affordable Care Act (ACA) that intended to fund future ACA healthcare costs. It has been dubbed the Cadillac Tax because it targets what are considered “overly generous” or “high-cost” employer-sponsored health plans.
But, what is the Cadillac Tax?
In simpler terms, the Cadillac Tax is a 40 percent excise tax that’s applied when employer-sponsored health plans exceed certain total cost thresholds.
According to the Tax Foundation, the thresholds for the 40 percent tax to kick in were expected to be in excess of $11,200 for single coverage and $30,150 for family coverage in 2022.
Would this affect employers and their employees?
The answer is yes. In fact, the Kaiser Family Foundation recently published an analysis concluding that 21 percent of employers offering health benefits plans would have been affected by the tax, and that percentage would only increase with time.
An employer’s typical planning window for benefits programs is two to five years. Until the repeal is passed by the Senate and signed into law, employers feel obligated to plan for these tax implications by reducing the value of health benefits, which can mean higher out-of-pocket healthcare costs for employees.
Currently, the Senate’s companion bill to the already passed House effort is S. 684: Middle Class Health Benefits Tax Repeal Act of 2019, and has 61 cosponsors -- enough to guarantee passage. All that remains is getting it on the Senate calendar.
How has WageWorks been involved?
Over the last several years, WageWorks has been a leader in advocating the delay, modification and now repeal of the Cadillac Tax. WageWorks compliance leaders, which include Jody Dietel, Chief Compliance Officer and Nicky Brown, VP of Compliance Services, have been active champions of this topic and addressed with Congressional staff and committee members.
Nicky Brown also recently spoke at an industry webinar on the topic of Legislation and Consumer-Directed Benefits (CDBs). After the news of the repeal, she weighed in by saying, “this is such a win for the industry!” and expressed her excitement to continue educating WageWorks’ clients on the impact of legislation on CDBs.
Watch to learn more about WageWorks’ advocacy efforts.
Log in / Register
