Keep “Cadillac Tax” in the Garage, National Advocates Urge Congress

A tax on healthcare plans that would penalize many county employers is set to go into effect in 2022.

The National Association of Counties has joined 500 other organizations in a letter to Congress, requesting repeal of a provision that would charge a fee to employers providing healthcare benefits to their employees that are over a certain low threshold of coverage.

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With base thresholds for the Cadillac tax at $10,200 for self-only coverage and at $27,500 for all other coverage tiers, the tax’s broad application means it might better be nicknamed ‘Chevrolet.’

The “Cadillac Tax,” as it is called, was designed to help subsidize the Affordable Care Act program. While the term Cadillac indicates a benefit-rich health coverage, in reality, even modest plans would trigger the 40% tax of employers.

County governments traditionally provide a relatively high level of benefits to their employees. Health insurance and other benefits are one of the ways that counties attract employees to service, even if salaries in the private sector are higher.

This tax could threaten those county benefits. As described by NACo,

“America’s 3.6 million county employees serve more than 200 million residents nationwide. The excise tax would hinder our ability to attract and retain a quality workforce, while increasing the burden on local taxpayers,” said Matt Chase, NACo executive director.

For more information, see the National Association of Counties blog post, NACo signs letter urging Congress to fully repeal Cadillac Tax and the Letter to Congress.

Previous coverage on Conduit Street, Swerve-to-Avoid the Cadillac Tax, Advice from the Experts.