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Momentum Builds to Ax Cadillac Tax

Repeal effort has bipartisan support, but the issue of replacing lost revenue is an obstacle.

By Susan Kelly | Updated on October 07, 2015
One element of the Affordable Care Act (ACA) that has posed major concerns for employers may soon cease to trouble them. There’s growing support for legislation that would repeal the ACA’s tax on high-cost employee health plans, dubbed the “Cadillac tax.”

Scheduled to take effect in 2018, the Cadillac tax requires companies to pay a 40% excise tax on health coverage that exceeds a certain level. In 2018, the levels are $10,200 a year for individual coverage and $27,500 for family coverage.

This was designed to be one of the ACA’s main means of containing healthcare costs. It is also expected to raise a significant amount of revenue to offset some of the costs associated with healthcare reform. The issue of replacing the lost revenue is the main barrier to a repeal.

The effort to eliminate the tax has broad-based support, not only from businesses, but also from unions and local governments and among both Republican and Democratic legislators. Politicians calling for a repeal range from presidential contender Hillary Clinton to House Ways and Means Committee Chairman Paul Ryan (R-Wisc.).

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