Employer advocacy group urges Cadillac tax repeal

A national association representing large employers submitted a letter of support Friday for a new bill that would repeal the Affordable Care Act’s controversial Cadillac tax.

The ERISA Industry Committee (ERIC) — a national association that advocates for large employers on health, retirement and compensation public policies — said it applauded the “Middle Class Health Benefits Tax Repeal Act of 2017,” and the efforts of Sen. Dean Heller (R-Nev.), Sen. Martin Heinrich (D-N.M.), Rep. Mike Kelly (R-Pa.) and Rep. Joe Courtney (D-Conn.) for working to eliminate the 40% excise tax on health benefits imposed by the ACA.

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U.S. House Speaker Paul Ryan, a Republican from Wisconsin, delivers remarks before being sworn-in in the House Chamber at the U.S. Capitol in Washington, D.C., U.S., on Tuesday, Jan. 3, 2017. Ryan was formally re-elected House speaker today at the start of the 115th Congress as he intensifies his efforts to move past his differences with Donald Trump after a divisive campaign. Photographer: Andrew Harrer/Bloomberg

“Employers have had a lot of trepidation about efforts to change the tax treatment of employer-sponsored health benefits,” says James Gelfand, ERIC’s senior vice president of health policy. “Most of the costs of health insurance are outside the control of the benefits sponsor.”

The tax targets health plans worth more than $10,200 for individual coverage and $27,500 for family coverage as a means to scale back on high-cost health-benefit plans.

Gelfand, who wrote the letter on behalf of the committee, says the tax on health insurance is based on cost rather than generosity. The misconception, he says, is that CEOs and other high-ranking employees are getting the best care and paying nothing for it.

“That’s not really what we’re talking about,” he says.

Rather, ERIC argued in its statement that “taxing employer-sponsored health insurance benefits would inevitably lead to worse health insurance for those who are offered plans, and [also would lead to] more employers declining to offer health benefits.”

See also: How one benefits exec is fighting the Cadillac tax

“ERIC is committed to repealing the Cadillac tax not only because of the crushing financial burden it would place on employers and employees, but also because compliance with the tax would be a time-consuming and expensive administrative burden,” the letter read.

ERIC isn’t the only group to come forward in support of repeal of the Cadillac tax.

Republicans and Democrats in Congress support the new bill, an updated version of the “Courtney-sponsored Middle Class Health Benefits Tax Repeal Act of 2015” that asks the IRS to repeal the excise tax. Unions and employers also support its repeal, as does President-elect Donald Trump.

The tax is currently delayed until 2020.

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