Congress Delays ACA’s Cadillac Tax until 2020

As part of its recent budget bill, Congress passed a two-year delay in the so-called Cadillac Tax, which was originally enacted as part of the Affordable Care Act (“ACA”).  The tax, which was slated to take effect in 2018, will now take effect in 2020.

The Cadillac Tax is a 40 percent tax on certain generous health insurance benefits offered by employers.  The employers offering these generous health plans are responsible for paying the tax.  The purpose of the tax when it was passed was to incentivize employers to seek lower-priced health plans, which would in turn slow the rise of the cost of health insurance and discourage overuse of insurance by employees.

The opponents of the Cadillac Tax, including some labor unions that fear it will affect their members’ health plans, are continuing to seek full repeal of the tax.  The repeal of the Cadillac Tax could affect the overall stability of the ACA because the tax was a significant source of funding to pay for other healthcare reforms.

David Dirr is an attorney at the Northern Kentucky office of Dressman Benzinger LaVelle and is a member of the firm’s healthcare and litigation practice groups.  He is licensed to practice in Ohio, Kentucky, and Indiana.  David concentrates his practice on the areas of Medicare and Medicaid reimbursement, anti-kickback law, the Stark law, and HIPAA.