Today, President Trump will sign funding legislation that was passed by Congress that will once and for all end the potential of the Cadillac Tax that imposes a 40% tax on health plans that cost over $10,200 for single coverage and $27,500 for families. While there is an extension for highly dangerous jobs (police, fire, railroad and electrical linemen etc.) many employers have used the potential of this tax to influence negotiations in an attempt to reduce the level of benefits our members receive.
While the tax was a crucial funding mechanism for the subsidies on the ACA exchanges it would have been catastrophic to our members and their health insurance. Congress also approved the removal of a medical device tax and a health insurance plan tax, both were being delayed along with the Cadillac tax that was set to be implemented in 2022. The State PBA is grateful to our national affiliate, NAPO who took the lead lobbying congress to repeal this poorly designed tax on a benefit that is so important to our members.
December 20, 2019
NAPO Victory! Cadillac Tax Repealed
In significant victory for NAPO and our members, Congress repealed the “Cadillac Tax”, the 40 percent excise tax on employer-sponsored health plans, as part of the Fiscal 2020 appropriations agreement (H.R. 1865). NAPO pressed Congressional leaders to support the inclusion of the Cadillac Tax repeal as part of any year-end, must pass legislative package. We applaud Congress for finally listening to us, to employers, workers, health plans and employee organizations who have been calling for the repeal of the tax since 2015 and we thank them for protecting public safety employees' hard-earned health benefits.
The Cadillac Tax was not just a tax on health plans; it was a loss of earned wages and benefits. Over the years, law enforcement officers through collective bargaining have often given up pay increases in order to secure better health care coverage. Under the excise tax, they were being penalized for entering into those good faith agreements with their employing jurisdictions. If the Cadillac Tax was allowed to be implemented, it would force public safety employees to pay the tax in the form of wage cuts, higher premiums, increased out-of-pocket costs, and lower benefits.
The repeal of the Cadillac Tax ensures public safety employees can maintain affordable, full coverage healthcare for themselves and their families.