No company in its right mind is going to pay the Obamacare 40% tax on high value health plans; it is a blatant waste of money. Instead they will and already are reducing benefits to stay under the value cap within the law. The one exception may be government plans and their powerful unions.
But employers and unions are not sitting still. As you can see below, there is a major movement to repeal this tax. The problem of course is that this tax along with many others plus fees and penalties is what is counted on to fund the grand promises made.
Proponents of Obamacare point to the millions of Americans who have gained coverage under the Law and that’s true, but it’s also true that Obamacare has set in place a giant entitlement that is costing all taxpayers, including employers billions of dollars and growing. You ain’t seen nothing yet.
The government’s assumptions regarding this tax are not only flawed, but ridiculous. Do you seriously believe that employers are going to reduce health benefits and then use those savings to give workers a raise? I mean seriously😛
In the meantime, you can help protect your health benefits by writing to your members of Congress asking them to support repeal of the 40% tax.
By the way, even if you don’t have employer-sponsored benefits, this tax will be reflected in your local property and income taxes because government workers have among the most generous, highest cost plans.
American Benefits Council
Tuesday, July 28, 2015Council and Others Formally Launch Coalition Seeking Repeal of 40 Percent (“Cadillac”) Tax
Earlier this spring the American Benefits Council reached out to a diverse group of organizations – business associations, unions, and public sector employers – to join together in seeking Congressional repeal of the 40 percent tax on high cost health plans, the so-called Cadillac tax, enacted as part of the Patient Protection and Affordable Care Act (PPACA). The result was establishment of the Alliance to Fight the 40 to complement the advocacy already underway by the Council, itself, and numerous other business groups and unions. The Alliance members have devoted the past several weeks to making numerous Capitol Hill visits to explain the negative implications of the tax.
The Alliance was formally launched on July 28 with a media briefing featuring both private sector and public sector employer groups, labor unions, and the two Members of Congress who have authored legislation to repeal the tax: Rep. Frank Guinta (R-NH) and Rep. Joe Courtney (D-CT).
Pursuant to PPACA, starting in 2018 a nondeductible 40 percent excise tax will be imposed on employer-sponsored coverage that exceeds certain thresholds ($10,200 for self-only, $27,500 for family). Aw.
“Our coalition highlights that protecting employer-sponsored health coverage is not solely just a union or business or public sector or private sector issue. The tax puts at risk the employer-sponsored health system covering over 150 million Americans. Even the Office of Personnel Management, the federal government’s human resources department, acknowledges that the tax will most likely require reducing health coverage and eliminating other benefits for federal employees,” said Council president James Klein, in his comments during the media briefing.
During the briefing numerous questions were posed by the media about the $87 billion revenue the Congressional Budget Office (CBO) estimates the provision will raise over the next 10 years. Both Rep. Courtney and Rep. Guinta, as well as Alliance members took issue with that estimate, noting its flawed premise that three quarters of the revenue is projected to be raised by employers reducing health benefits and then “making it up to workers” in the form of higher, taxable, wages.
“Ironically,” Klein noted, “if the CBO is right and we are wrong, then the 40 percent tax will represent a massive tax hike on working Americans. (because health benefits are tax-free). But if we are right and CBO is wrong, then the expected revenue will never materialize.”
The American Benefits Council is the national trade association for companies concerned about federal legislation and regulations affecting all aspects of the employee benefits system. The Council’s members represent the entire spectrum of the private employee benefits community and either sponsor directly or administer retirement and health plans covering more than 100 million workers.
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