One of the most widely disliked provisions of the 2010 Affordable Care Act is the 40 percent excise tax it imposed on health insurance plans costing more than $10,200 for individuals or $27,500 for families. The so-called “Cadillac tax” was originally set to become effective this year, but its implementation date was later pushed back to 2020. A Republican plan to repeal and replace the ACA, which ultimately failed in Congress last year, had proposed to delay the tax until 2025, although employers have been pushing for its total repeal.
The major tax reform bill passed by Congress last month did not touch the Cadillac tax, but a resolution to restore funding to the federal government this week after legislative gridlock led to a government shutdown included a further delay in its implementation, SHRM reports:
Both political parties supported the provision to postpone the so-called Cadillac tax from taking effect until 2022, instead of in 2020—as did the Society for Human Resource Management (SHRM). The stopgap funding bill also amends other tax provisions that were part of the Affordable Care Act, such delaying the medical device tax—a 2.3 percent tax on the sale of certain devices—until 2020. …
“SHRM has long advocated for full repeal of the excise tax and applauds the new two-year delay,” said Chatrane Birbal, senior advisor of government relations at SHRM. The postponement will provide much needed relief to employers and employees and “is an acknowledgement by Congress of the importance of employer-sponsored health insurance, which provides benefits to over 178 million Americans and their families.”
Looking ahead, SHRM will continue to support and encourage Congress to fully repeal the excise tax, Birbal said. “Repealing this tax has strong bipartisan, bicameral support,” she noted.