On Jan. 22, Congress passed and President Donald Trump signed into law a two-year delay on the Affordable Care Act's (ACA) 40 percent excise tax—the "Cadillac tax"—on high-value health care benefits. The provision was part of the continuing resolution (CR) to restore funding for the federal government through Feb. 8, ending a 3-day partial shutdown of the government.
Prior to the U.S. Senate vote on the measure, SHRM's President and CEO Johnny C. Taylor, Jr., SHRM-SCP, sent a letter to Senate Majority Leader Mitch McConnell (R-Ky.) and Minority Leader Charles Schumer (D-N.Y.) urging their support for the delay of the excise tax.
SHRM has long advocated for full repeal and/or delay of the implementation of the Cadillac tax and, to date, we've been successful in our efforts thus far. The tax was originally set to go into effect on January 1, 2018, but through advocacy efforts of SHRM and others in the employer community, it has been delayed twice. Both political parties supported the provision to delay the tax from 2020 to 2022.
The delay of the tax is an acknowledgement by Congress of the importance of employer-sponsored health insurance, which provides benefits to over 178 million Americans and their families. With the two-year delay of the tax now in place, efforts to fully repeal the tax will likely remain on Congress' "to do" list. SHRM, as a leader of the National Coalition on Benefits, has been a strong proponent of bipartisan, bicameral legislative proposals to repeal the tax. To that end, we will continue to work with champions in the House and Senate who have introduced legislation to fully repeal the tax: Senators Dean Heller (R-NV) and Martin Heinrich (D-NM) and Representatives Mike Kelly (R-PA) and Joe Courtney (D-CT).
Looking ahead to the rest of 2018, efforts to "repeal and replace" the ACA will likely be halted pending the outcome of the upcoming November elections. As a result, Congress will likely focus on more-targeted modifications to the ACA to address affordability, coverage and quality of care. For example, on December 22, 2017, President Trump signed into law the Tax Cuts and Jobs Act, reducing the individual mandate penalty under the ACA to zero, effective in 2019. In addition, as mentioned above, the president signed into law a stopgap government funding bill which includes the delay of three ACA taxes: 1) A one-year moratorium on the excise tax on health insurance carriers (for 2019), 2) A two-year delay of the medical device tax (until 2020), and 3) A two-year delay of the Cadillac tax (until 2022).
As Congress considers measures to modify the ACA, SHRM will continue to advocate in support of the employer-sponsored system. Stay tuned to future editions of HR Issues Update for timely and relevant updates on this important issue for HR practitioners.