Congress Pushes Back Health Care ‘Cadillac Tax’

Delay Was Part of Last Week’s Sweeping Budget Agreement

The big news out of Washington last week was that Congress had reached a deal on a sweeping spending and tax package. As with any compromise, there were pluses and minuses. While there are tax breaks that help working families, there are also breaks and loopholes for corporations.

One of the biggest actions lawmakers took in the agreement is a two-year delay of the so-called Cadillac tax that’s part of the Affordable Care Act. This excise tax was set to go into effect in 2018 and would tax employers who provide high-cost health care coverage. The cost of that tax hit would undoubtedly be passed on to employees, eventually, so this is a big deal for working families — especially those in labor unions who’ve negotiated away other benefits in exchange for better health care coverage.

If you’re wondering why a tax such as this exists, it’s pretty simple: it’s there to encourage employers to choose lower-cost health care plans (you can read a more detailed explanation here). This is still only a delay of the tax, which would now go into effect in 2020, but the change is significant because it’s the first major fix that lawmakers have made to the law since its passage. While this rare agreement could represent some hope for the future, it’s important for us to continue to work with our employers to keep costs down, because 2020 is just a handful of years away.


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