As the Cadillac excise tax continues to inspire calls for repeal within the House, to gain a deeper understanding of the current debate in Congress, let’s explore the intent of the tax.

To recap, the Cadillac tax is imposed on high cost health plans. Specifically, the 40% tax is imposed on premiums in excess of $10,200 for individual plans and $27,500 for family plans. The tax is assessed on insurers or employers if they are self-insured.

Newly released Congressional Research Service reports estimate that the Cadillac tax will raise $87 billion in revenue between 2016 and 2025. The reports also predict that the tax could cause employers to keep high cost health plans, but cut employee wages to compensate. Proponents of the tax argue that it is necessary to dissuade employers from offering benefit rich plans, which encourage overuse of services and raise healthcare costs in the U.S.

The tax is set to become effective in 2018 and will be a key focal point in Congress coming out of the August recess. alliantNational will continue to keep you up to date as things progress on the Hill.

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