Momentum is building in Washington to repeal the Affordable Care Act's tax on high-cost employer health plans—a move that would undo policymakers' previous goal of restructuring a tax exclusion that disproportionately benefits higher income workers and insulates all employees from experiencing most of the pain of rising healthcare costs.
The so-called Cadillac plan tax will go into effect in 2018. Employer-sponsored plans with annual benefit values above $10,200 for individuals and $27,500 for families will face a 40% excise tax for the amount over the threshold. Those thresholds will increase annually with the Consumer Price Index instead of the rate of healthcare inflation, which over the next decade means far more plans will get thrown into the taxable category.
Companies and unions that over the years funneled taxable wage increases into maintaining a generous level of untaxed health benefits lost their battle to keep the Cadillac tax out of the ACA. Now they have launched a lobbying group called the Alliance to Fight the Forty to push for two bills repealing the tax that are winning bipartisan support from members of Congress as it heads into an election year.