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Will You Be Driving A Cadillac in 2022?

Maybe not the car, but hopefully your health insurance. In an unusual bipartisan action, the House passed a bill that would repeal the “Cadillac tax”, scheduled to be imposed on high-cost employer health insurance in 2022. The act, titled the Middle Class Health Benefits Repeal Act, passed with a 419-6 vote, would kill this excise tax, which was a component of the original Affordable Care Act.

To refresh your memory, the Cadillac tax would require plan sponsors and insurers to pay a 40% excise tax on what might be considered an excess cost of employer-sponsored health care coverage for employees–amounts over $11,200 for individuals and $30,100 for families, adjusted for inflation. The imposition of this tax would serve as a strong disincentive for employers to offer attractive health insurance plans, and encourage them to substitute coverage below these thresholds.

What is the direct impact of the Cadillac tax on participants in employer-sponsored health plans? First, it has been well publicized that approximately 80% of individuals and families get their health care from an employer and most are satisfied with the coverage. Further, per the Kaiser Family Foundation, in an analysis of the Cadillac tax, 21% of employers offering health benefits could be affected by the tax when it goes into effect in 2022, and that number couls increase to 37% by 2030. If employers are forced to reduce their health care plans below the Cadillac tax threshold limits, employees will see an increase in out-of-pocket costs.

It’s unclear what the Senate will do. There is a similar bill with bipartisan support, but Senate Majority Leader Mitch McConnell (R-Ky) has not said whether he will bring it up for a vote. We know that the Republicans aren’t anxious to take up health care legislation, so it remains to be see what happens there.

Why are we punishing employer and employees whose plan expenses are beyond their control? Aren’t we trying to help older workers, individuals with chronic conditions and those who have experienced catastrophic events?

I guess we’ll see…..

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