For Immediate Release
February 9, 2016
February 9, 2016
Alliance to Fight the 40 Opposes FY 2017 Budget Provision
to Tweak the “Cadillac Tax”
to Tweak the “Cadillac Tax”
Washington, DC— The Alliance to Fight the 40, a broad-based
coalition seeking to repeal the 40% tax on employee health benefits, today
urged Congress to repeal the “Cadillac Tax,” as the proposal included in the
President’s FY 2017 fails to address the numerous structural problems with the
tax.
“Congress
must repeal the ‘Cadillac tax’ to protect health benefits for 175 million
hardworking Americans, retirees, and their families,” said James A. Klein,
President of the American Benefits Council. “The President’s proposal
acknowledges that the tax is seriously flawed, but takes extremely modest steps
to address the problem,” said Klein.
Specifically,
the proposal provides a geographic adjuster to the threshold rates in states
where the average premium for “gold” coverage on the state’s individual health
insurance marketplace would exceed the current-law "Cadillac Tax"
threshold. The adjusted rate in those states would be set at the level of
average gold premium.
“Even
if that change were made, it would not address the terribly unfair impact of
the tax on plans that are expensive simply because they cover a large number of
women, older or disabled employees and families whose members have chronic
conditions or catastrophic health events. The proposal merely requests a study
of the impact of the tax on sick workers,” noted Klein.
“This
flawed tax allows people obtaining coverage in the individual market exchanges
substantially richer benefits than what may be offered to people getting
coverage from their employers,” said Klein. The “Cadillac Tax” thresholds
include a variety of health care benefits beyond premiums. On-site medical
clinics, employee assistance programs, wellness programs and employer and
employee HRA/HSA/FSA contributions all count toward the “Cadillac Tax”
thresholds. The budget proposal would compare the premium-only price of
coverage sold in the individual exchanges to the more comprehensive
"Cadillac Tax" thresholds, forcing employers to offer skimpier
benefits to stay below the new thresholds.
Employers
have been engaged in innovative health care cost control for decades. By
contrast, this proposal does nothing to reduce the true drivers of increasing
health care costs.
“Finally,
the President’s budget continues to rely on the erroneous assumption that
workers will see wage increases commensurate to the health benefit cuts they
will suffer. To the contrary, employer surveys continue to show that employers
are reluctantly making benefits reductions now. Yet the Administration has
presented no actual evidence that wages will rise in response to benefit cuts,”
said Klein.
The Alliance to Fight the 40 is
a broad based coalition comprised of public and private sector employer
organizations, consumer groups, patient advocates, unions, health care
companies, businesses and other stakeholders that support employer-sponsored
health coverage. This coverage is the backbone of our health care system and
protects over 175 million Americans across the United States. The Alliance
seeks to repeal the 40% tax on employee health benefits to ensure that
employer-sponsored coverage remains an effective and affordable option for
working Americans and their families.
For more information on the 40% Tax
on Health Benefits, visit our website at www.fightthe40.com or
follow us on Twitter @Fightthe40.
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