- President Donald Trump signed a bill Dec. 20 repealing the Affordable Care Act's (ACA) "Cadillac tax."
- The U.S. Senate voted 71-23 Dec. 19 to approve the spending bill that included a repeal of the ACA's excise tax on high-cost, employer-sponsored healthcare plans, also known as the "Cadillac tax." The House of Representatives approved the bill, H.R.1865, in a 297-120 vote earlier in the week.
- The tax was set to take effect in 2022; it would have taxed employer-sponsored plans worth more than $10,200 for "self-only" coverage and $27,500 for other coverage.
News of the tax's repeal is "a big sigh of relief" for employers and their health plans, Steve Wojcik, vice president of public policy at the National Business Group on Health (NBGH) told HR Dive in an interview. He added that the repeal should help benefits professionals, particularly those at larger employers, better prepare for the near-future.
"For larger companies in particular, they usually plan their benefits 18 months if not two years ahead of time," Wojcik said. "They would have had real hard decisions on what [they would] need to stay below this tax."
At the same time, many employers likely haven't done much to prepare for the tax beyond preliminary planning due to repeated implementation delays, Jonathan Zimmerman, partner at Morgan Lewis, told HR Dive in an interview. "I think a lot of employers felt that the tax wouldn't ever take effect," he said.
Both Wojcik and Zimmerman said the repeal would give employers more room to experiment with different healthcare plan designs. Wojcik said the trend toward consumer-directed health plans — those that combine elements like higher deductibles and health savings accounts — might benefit from the repeal. "I think you might see an acceleration of offering more plan type choice," he said.
The tax had drawn bipartisan opposition in recent years, although it was initially intended to help reduce healthcare costs, Zimmerman said. Experts previously told HR Dive that the tax could also have been used to fund components of the ACA. House Republicans attempted to implement a different funding measure in the form of a cap on the tax break for the 90th percentile of employer-sponsored health insurance plan premiums, which was part of the American Health Care Act introduced in 2017, but the bill failed.