Mercer 'Cadillac' Tax Comments; Congress Mulls ACA Changes

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Mercer 'Cadillac' Tax Comments; Congress Mulls ACA Changes
Calendar02 October 2015

Mercer this week submitted comments to the IRS urging simplified approaches to the calculation, administration and payment of the 40 percent excise tax on high-cost health plans (the 'Cadillac tax'). Mercer’s comment letter recommends methodologies for implementing the tax’s age and gender adjustments, streamlined approaches to administering the tax, and use of an actuarial value safe harbor as a better measure of the richness of health benefits than the law's cost thresholds alone. Mercer also provided comments to the IRS in May on a separate set of issues. Both comment letters will help inform development of proposed regulations expected at some point in 2016.

In Congress this week, House committees passed legislation to repeal the Cadillac tax, employer shared-responsibility requirements, the automatic-enrollment mandate, and other ACA provisions. The proposals, approved along party lines, now head to the House Budget Committee, which will incorporate them into a budget reconciliation measure for consideration by the full House. The timing for House action on budget legislation is uncertain, as is the outlook in the Senate, which could pass any reconciliation measure by a simple majority instead of the 60 votes normally required. President Obama is expected to veto the legislation if it lands on his desk.

The Senate cleared legislation (S 1099) for the president’s expected signature that would effectively repeal the ACA provision that changed the definition of small group from 2-50 to 2-100 that is set to become effective on Jan. 1. The provision would raise premiums for many formerly large groups if subjected to the ACA's ban on health status and gender rating, age rating restrictions and the mandate to cover essential health benefits, according to critics. The soon-to-be law will let states choose whether to expand their small group markets to 100 employees.

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