Health Law & Policy
| Jul 18 2019

House Votes to Repeal ‘Cadillac’ Tax, Action Moves to Senate

Geoff Manville
Partner, Mercer’s Law & Policy Group

By an overwhelmingly bipartisan vote of 419-6, the House has passed legislation to fully repeal the Affordable Care Act’s “Cadillac Tax” on health benefits. The Senate outlook is uncertain, but the strength of the House vote and broad support for a companion Senate bill could spur action. The tax, twice previously delayed by Congress, is slated to begin in 2022 and apply a 40% excise tax to “high cost” employer-sponsored health coverage.

Notably, the House approved the Middle Class Health Benefits Tax Repeal Act without offsetting its projected cost of $193 billion over ten years. Backers of the bill had been concerned that the House’s “pay-as-you-go” rule that generally requires legislation to be budget neutral might prevent action, and that an offset chosen by Democrats may be objectionable to Republicans and undermine bipartisan support.  

On the other side of the Capitol, counterpart Senate legislation now has 42 bipartisan cosponsors. The broad-based Alliance to Fight the 40, of which Mercer is an active member, and plan sponsors are now focusing efforts on increasing Senate support and working with Senate leadership to urge that the bill be attached to any moving legislative vehicle. 

Mercer has and will continue to be an active member of the Alliance, participating in meetings with policymakers, providing survey data, and modeling the tax’s adverse effects for the employer-based system that provides coverage to more than 181 million Americans.   

For more on the Cadillac tax state-of-play as well as updates on other health care, retirement, and executive reward policy and compliance developments, tune in to Mercer's Washington Update Briefing on July 25th from 1-2 pm ET.  Register here.  

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