Congress May Delay Affordable Care Act Tax

The bi-partisan compromise on the budget would postpone a 40% excise tax on many county government employee healthcare plans.

As reported in the Washington Post, a two-year postponement in what has been called the “Cadillac tax,” is included in the budget package on which the House and Senate are preparing to vote within the next few days.

Update: House passes 2 year suspension of Cadillac Tax.

The Cadillac tax is an excise tax on high cost, employer-sponsored health insurance coverage. The tax is currently due to take effect in 2018.

Delaying the Cadillac tax is a significant move by Congress, as described by the Washington Post,

A decision by Congress to defer a new tax on expensive employer health plans would cost the government an estimated $9 billion and have a potent symbolic effect as the first major change that lawmakers have made to the Affordable Care Act since its passage.

Since public employers tend to offer more robust healthcare benefits than private businesses, a disproportionate number of public employers, including county governments, would see the tax passed on the them. The Affordable Care Act Cadillac tax imposes a 40% tax on health insurance issuers and self-funded plans with annual premiums that exceed a certain thresholds.

For more information, see the full story from the Washington Post and our previous posts, Don’t Exhale Yet, a New Tax on Healthcare Is Coming, and a recent webinar on the Cadillac Tax from Segal Consulting.