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Alliance formed to seek repeal of ACA “Cadillac” tax

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A diverse group of two dozen employers, insurers and unions has banded together to form an alliance to convince Congress to repeal the health care reform law’s so-called “Cadillac” tax.

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

“The 40% tax hits ordinary plans that are expensive simply because they cover many people with high health costs — women, older and disabled workers and families with catastrophic health events,” James A. Klein, president of the Washington-based American Benefits Council and one of the members of the new group — Alliance to Fight the 40 — whose formation was announced Tuesday—said in a statement.

Earlier, the Congressional Budget Office projected that the tax will raise tens of billions of dollars in new federal revenues. If the CBO is right, “this will be a massive tax hike on working Americans. If they are wrong, the revenue will never materialize,” Mr. Klein said.

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.

Legislation, H.R. 2050, was earlier introduced in the House of Representatives to repeal the tax. While the measure, introduced by Rep. Joe Courtney, D-Conn., has more than 125 cosponsors, lawmakers have not taken any action on the bill.