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Bipartisan Senate bill aims for Cadillac tax repeal

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Bipartisan legislation introduced Thursday in the Senate would repeal the health care reform law's so-called Cadillac tax.

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

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.

The legislation, introduced by Sens. Dean Heller, R-Nev., and Martin Heinrich, D-N.M., would repeal the tax on Dec. 31, 2017, just before its effective date.

“Doing away with this onerous tax on employees' health coverage before it goes into effect will protect important benefits for workers and ensure businesses and families get a fair deal,” Sen. Heinrich said in a statement.

Business groups strongly back repeal of the tax. “The effect of the 40% excise tax goes beyond employers; it could be detrimental to the health of millions of employees and their families if employers are forced to curtail their health benefits in order to avoid the tax,” Annette Guarisco Fildes, president and CEO of the ERISA Industry Committee in Washington, said in a statement.

“Repealing the 40% tax, thereby preserving high-quality employer-sponsored health coverage, should and would be a bipartisan, bicameral success story,” said James Klein, president of the American Benefits Council in Washington and a member of the diverse Alliance to Fight the 40 coalition recently organized to fight the excise tax.

Similar legislation, H.R. 2050, was earlier introduced in the House by Rep. Joe Courtney, D-Conn. That measure now has 145 co-sponsors.