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Business groups call for repeal of Cadillac tax

Posted On: Jun. 26, 2015 12:00 AM CST

Business groups are calling on congressional leaders to repeal a health care reform law provision that will impose a hefty federal excise tax on high cost health care plans.

Under that Patient Protection and Affordable Care Act provision, a 40% excise tax will be imposed, starting in 2018, on group health care plan premiums exceeding $10,200 for single coverage and $27,500 for family coverage.

The business groups, which include the American Benefits Council, the National Association of Manufacturers, the National Business Group on Health and the U.S. Chamber of Commerce, say in a letter sent Thursday to federal lawmakers that while the so-called Cadillac tax was supposed to be imposed on a small number of health plans, “current projections, as well as our actual experience with health costs, show that this 40% tax will affect the health plans of all types of employers and a wide range of workers, including low- and moderate-income families.”

An earlier analysis by benefit consultant Towers Watson & Co. projected that 48% of employers with at least 5,000 employees that offer health plans could be hit by the excise tax in 2018, with 82% affected by 2023.

In addition, the 40% tax will be “complicated to calculate and administer,” the groups said.

Legislation, H.R. 2050, to repeal the tax was earlier introduced in the House of Representatives. No action, though, has been taken on the measure, which has 115 co-sponsors.

The letter was sent to the chairmen and ranking members of the Senate Finance and House Ways and Means committees.