Lawmakers Considering Year-End Health Care Tax Provisions

By Chatrane Birbal Dec 8, 2017
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Legislative efforts to repeal and replace the Affordable Care Act (ACA) have largely stalled on Capitol Hill. However, legislation is being crafted to address many outstanding health care-related tax policy provisions that could end up being attached to a year-end spending bill. Lawmakers have not yet disclosed which provisions would be in the bill, but SHRM believes it is critically important that Congress act to further delay implementation of the 40 percent excise tax (otherwise known as the "Cadillac tax") on high-value, employer-sponsored health care plans in any year-end deal.

In 2015, Congress delayed implementation of the tax until 2020. As a refresher, the Cadillac tax would be applicable to high-value employer-sponsored benefits exceeding certain thresholds ($10,800 for individual coverage and $29,100 for family coverage).

Although the Cadillac tax is not effective until 2020, HR professionals and employers are already restructuring their health care benefits offerings to avoid the tax. As 2020 approaches, more employers will closely scrutinize their health benefits offerings and will make the necessary changes to avoid the Cadillac tax. If the 40 percent excise tax is not delayed, many employers may be forced to cut benefits, alter wellness and chronic care prevention programs, and reduce innovative new benefits offerings. Employees will be negatively impacted further by higher co-pays and deductibles, and this could even cause some to decline employer-provided health care.

According to SHRM's 2016 Employee Benefits research report, 96 percent of member organizations offer health care coverage to employees and their dependents. If the tax goes into effect, 33 percent of SHRM members' organizations will be subject to it. 

The Cadillac tax has been widely opposed by both Democrats and Republicans, along with a wide coalition of business, health and labor organizations. Over 200 members of the U.S. House of Representatives have co-sponsored legislation to repeal this burdensome tax. SHRM has long advocated for the repeal of the Cadillac tax. 

Urge Congress to Delay the Cadillac Tax

It is critical that HR constituents reinforce this message to lawmakers. To facilitate e-mail communication with your U.S. congressional members, SHRM's Government Affairs team has prepared a template letter that is available at HR SHRM Policy Action Center. Through the SHRM Policy Action Center, you can edit and personalize your message and send it directly to your lawmakers' Washington, D.C., offices. Your personal e-mail will help your representative and senators understand how the anticipated Cadillac tax will have an adverse effect on health care offerings to employees. 

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