Employer groups want more than two-year delay to Cadillac tax

Lawmakers and industry heavyweights hailed Congress’ passage of a comprehensive $1.1 trillion spending package Friday, saying the inclusion of a two-year delay in implementing the Affordable Care Act’s highly contested “Cadillac tax” would give employers some breathing room while providing more time to build enough support for a full repeal — but they want more.

“A two-year delay moves the threat of taxes that much further down the road, which is welcome,” says Steve Wojcik, vice president of public policy at the National Business Group on Health. “Employers also have a little more time to make plan changes, but as long as healthcare costs keep rising faster than inflation, those changes will continue.”

Also see: “Should we really fear the excise tax?”

The Society for Human Resource Management also backed the measure, calling it a “good first step.”

“While a two-year delay in the implementation of the ACA excise tax will provide much-needed relief to employers and employees, SHRM strongly supports efforts and encourages Congress to fully repeal the excise tax,” the group says. “SHRM and its members believe that effective healthcare reform should expand access to coverage, including strengthening and improving the employer-based healthcare system. The excise tax as currently structured will negatively impact employees through increased cost-sharing, higher co-pays and higher deductibles, and could even cause a decline in employer-provided healthcare.”

What’s ahead

There are many who hope this might be a sign of a full repeal of the measure later down the road.

Also see: “9 benefit trends for advisers to watch in 2016.”

NBGH’s Wojcik notes there is strong, bipartisan momentum and support for repeal of this “poorly constructed and potentially very damaging provision,” and efforts to repeal it are likely to continue. 

“When people really look at the so-called ‘Cadillac tax,’ they see what a bad deal it is for employers and employees,” says James A. Klein, president of the American Benefits Council. “Every week more organizations join our diverse coalition — the Alliance to Fight the 40 — to seek repeal of the tax. A two-year delay helps us continue building momentum for repeal.”

Also see: "Congressman calls for delay of health insurance tax."

The Independent Insurance Agents & Brokers of America also threw its support behind the bill’s passage. “We believe the two-year delay of the tax is an important first step, and independent agents around the country can rest assured that the Big ‘I’ will continue to fight to fully repeal the tax,” says Robert Rusbuldt, Big “I” president & CEO.

In addition to the excise tax delay, health insurers nabbed a victory in the spending bill, getting a one-year hold on the also hotly contested Health Insurance Tax.

“A delay of these taxes is a step in the right direction,” adds National Association of Health Underwriters CEO Janet Trautwein. “If implemented, the Cadillac tax and health insurance tax will push healthcare costs even higher and hurt middle-class workers. It’s the cost of medical care that drives health insurance premiums and these taxes do very little to rein in healthcare costs.”

The House approved the measure in an early morning 316-113 vote. The Senate later backed the bill 65-33, sending it to President Barack Obama, who is expected to sign it into law.