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Health plans impacted by ACA's excise tax vary widely by state

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Group health insurance plans whose premium costs will trigger the health reform law's 40% excise tax vary widely by state, according to a new congressional analysis.

Under the Patient Protection and Affordable Care Act, the so-called Cadillac tax will be imposed, starting in 2018, on the portion of a health care plan's premium that exceeds $10,200 for single coverage and $27,500 for family coverage.

States with the highest percentage of plans whose premiums are expected to trigger the ACA excise tax for single coverage, according to the Congressional Research Service report, are Alaska, where 29.6% of plans are expected to trigger the tax, Wyoming, 17.6%, Massachusetts, 15.8%, Montana, 15.7% and Delaware, 14.8%.

At the other end, just 4.6% of employer plans in Iowa offering single coverage are expected to trigger the tax in 2018, followed by Kentucky, 4.7%, South Carolina, at 5%, Hawaii, 5.2% and Alabama, 5.3%.

The tax, according to the CRS report, is supposed to raise tens of billions of dollars in new tax revenues as employers cut back benefits to stay under the tax trigger and instead boost employees' taxable wages.

Numerous employer groups and others, though, doubt that scenario will develop.

“It is economic theory, not hard evidence, supporting the claims that employers will make up lowered health benefits with higher wages,” according to a letter sent earlier this month to federal lawmakers by the Alliance to Fight the 40, which comprises more than two dozen employers, insurers, unions and other organizations opposed to the tax.