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Clock ticking on Cadillac tax repeal

Clock ticking on Cadillac tax repeal

Between time off for the upcoming Democratic and Republican national conventions and the fall presidential and congressional elections, only a few weeks remain this year for Congress to be in the regular congressional session.

“The amount of time remaining is very limited,” said Amy Bergner, managing director of people and organization at PricewaterhouseCoopers L.L.P. in Washington.

Adding to the unlikelihood that Congress will act soon on any of several repeal proposals is lawmakers' action last year that delays the 40% excise tax until 2020. It is to be imposed on group health plan premiums that exceed $10,200 for single coverage and $27,500 for family coverage.

Given the two-year delay, “legislators don't need to address” the excise tax right now, said Steve Wojcik, vice president of public policy at the National Business Group on Health in Washington.

Even if lawmakers approved repealing the tax in a lame duck session after the November elections, President Barack Obama would almost certainly veto it. Earlier this year, the House of Representatives fell short of the two-thirds majority required under the Constitution to overturn the president's veto of a broader measure, H.R. 3762, that included repealing the excise tax.

On a related front, earlier expectations that the Internal Revenue Service would issue proposed excise tax regulations by the end of June have virtually vanished. Now, it's unlikely those rules will be issued before the end of the year, Ms. Bergner said.

Still, business groups say they are encouraged that the excise tax will be repealed before it goes into effect.

For example, Democratic presidential candidate Hillary Clinton backs repealing the tax.

“Having someone in the White House (in favor of repeal) would certainly help to ensure that the issue receives attention,” said James Gelfand, senior vice president of health policy at the ERISA Industry Committee in Washington.

GOP presidential candidate Donald Trump hasn't specifically addressed the excise tax, though he has backed repealing the entire Patient Protection and Affordable Care Act.

Employer groups argue the tax would more likely be triggered in high-cost states than those with lower costs.

In addition, they say there is no evidence to support the congressional rationale behind the tax: that it would raise billions of dollars in federal revenue as employers boost employees' taxable wages to compensate for reducing their health benefits to avoid the tax.

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