Organizations Urge Congress to Repeal the Cadillac Tax, Preserve Health-Plan Tax Deductions

NAIFA has signed onto a letter along with more than 30 organizations urging members of Congress to repeal the 40 percent “Cadillac Tax” on health benefits that is part of the Affordable Care Act. The letter further asks Congress to avoid capping individual tax exclusions for employer-provided health care or limiting the ability of employers to deduct health care expenses from their taxes.
 
The Cadillac tax disproportionately harms early retirees, women, older workers, large families and people living in areas where health care costs are high and has been shown not to reduce overall health care costs.
 
The letter cites a Congressional Budget Office analysis that found limiting income- and payroll-tax deductions for health care benefits would increase costs for “people with substantial health problems,” potentially limit access to health care services, possibly discourage employers from hiring older workers, and “lead fewer employers to offer health insurance.”
 
The letter notes that “many of the current ACA replacement proposals rely on increasing individuals’ taxes on employer-sponsored health insurance by capping their tax exclusion.” This would be a bad idea, the letter says. It urges lawmakers not to replace the Cadillac Tax with a similarly harmful cap on the health care benefits tax exclusion.
 
  • Posted December 16, 2016 IN


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