July 28, 2015
NR 2015-16

For additional information:
Deanna Johnson
office 202-289-6700

Over 150 million Americans' health coverage at risk
Business and Employee Groups, Public and Private Sector Join Forces to Repeal the 40 Percent Tax on Health Benefits aka "Cadillac Tax"

WASHINGTON, DC — Today, the American Benefits Council and a diverse group of public and private sector employers, unions and other organizations launched The Alliance to Fight the 40, a coalition to repeal the 40 percent tax on health benefits, the so-called "Cadillac tax".

"The 40 percent tax hits ordinary plans that are expensive simply because they cover many people with high health costs -- women, older and disabled workers and families with catastrophic health events," said James A. Klein, president of the American Benefits Council, one of the organizers of the Alliance.

"Our coalition of strange bedfellows highlights that protecting employer-sponsored health coverage is not just a union or business or public sector or private sector issue. The 40 percent tax puts at risk the employer-sponsored health system covering over 150 million Americans. Even the Office of Personnel Management, the federal government's human resources department, says the tax will most likely require reducing health coverage and eliminating other benefits for federal employees," Klein added.

Starting in 2018, the Affordable Care Act stipulates imposes a 40 percent nondeductible tax be imposed on employer-sponsored coverage that exceeds certain thresholds: $10,200 for employee-only and $27,500 for family coverage.

"This is not a 'tomorrow is another day' problem. Employers are reluctantly compelled, right now, to require employees to bear a larger share of escalating costs in an effort to avoid triggering the tax. Employees are already facing higher deductibles and other cost-sharing requirements. Even with current efforts, studies show that nearly half the health plans nationwide will trigger the tax in 2018 and many more shortly thereafter," said Klein.

"Defenders of the 40 percent tax say it's needed to pay for the health law. The Congressional Budget Office (CBO) estimates that three quarters of the projected $87 billion revenue will come from employers lowering health costs and making-up the difference with higher taxable wages. The irony is that if CBO is right, this will be a massive tax hike on working Americans. If they are wrong, the revenue will never materialize," Klein concluded.

The Alliance to Fight the 40 is a broad-based coalition comprised of public and private sector employer organizations, 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 150 million Americans across the United States. The Alliance seeks to repeal the 40 percent 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 percent tax on health benefits, visit the Alliance to Fight the 40's website at www.fightthe40.org or follow us on Twitter @Fightthe40.

For more information, or to schedule an individual interview with Klein or other Alliance members, contact Deanna Johnson at djohnson@abcstaff.org or by phone at 202-289-6700.

 

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The American Benefits Council is the national trade association for companies concerned about federal legislation and regulations affecting all aspects of the employee benefits system. The Council's members represent the entire spectrum of the private employee benefits community and either sponsor directly or administer retirement and health plans covering more than 100 million Americans.