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PIA Endorses Two Bills to Repeal 40% Excise Tax on Employer-sponsored Health Plans

WASHINGTON — The National Association of Professional Insurance Agents has endorsed two bills in Congress that would both fix a major flaw in the Affordable Care Act by repealing an excise tax on certain employer-sponsored health plans...
May 6, 2015

Insurance Agents Say “Cadillac Tax” Is a Ticking Time Bomb for Policyholders


WASHINGTON
— The National Association of Professional Insurance Agents (PIA) has endorsed two bills in Congress that would both fix a major flaw in the Affordable Care Act (ACA) by repealing an excise tax on certain employer-sponsored health plans.

The 40 percent excise tax on so-called “overly generous” employer plans is set to take effect in 2018. Commonly referred to as the “Cadillac Tax,” it will have a much broader effect than Congress intended and is likely to have a disparate impact on certain groups.

“The ‘Cadillac Tax’ is a ticking bomb that is set to explode in 2018 and deny health coverage to millions of middle-class Americans,” said PIA National Executive Vice President & CEO Mike Becker. “It has the potential to create more market disruption than we’ve seen since the inception of the ACA, all to benefit government programs.”

PIA has endorsed two similar pieces of legislation: the “Ax the Tax on Middle Class Americans’ Health Plans Act” (H.R. 879), introduced by Congressman Frank Guinta (R-NH), and H.R. 2050, a bill to repeal the excise tax introduced by Rep. Joe Courtney (D-CT).

“PIA strongly supports repeal of the ‘Cadillac Tax’ because it will impact not just high-benefit plans, but moderate-benefit plans, and it could have an unequal impact based on the age, gender, family-size and geographic location of an employer’s workforce,” said PIA National Director of Federal Affairs Jon Gentile. “This tax has the added consequence of punishing people enrolled in private sector health plans by hitting them with a 40% surtax, simply because they have good coverage. That’s inherently unfair.”

In addition, PIA submitted comments to the Internal Revenue Service (IRS) on May 4 seeking guidance on how the tax will be calculated and offering suggestions to help stem unintended consequences of the law.

“While PIA agrees that controlling healthcare costs is important, PIA is concerned that the forthcoming excise tax will have a disparate impact on certain classes,” said PIA National Counsel & Director of Regulatory Affairs Jennifer M. Webb, in comments to the IRS. “The tax is intended to target only high cost employer-sponsored health plans, not moderate benefit plans. However, a Mercer survey recently estimated that it would impact 31% of employers in 2018 and 51% of employers by 2022, indicating the excise tax will have a much broader effect than Congress intended.”

Founded in 1931, PIA is a national trade association that represents member insurance agents and their employees who sell and service all kinds of insurance, but specialize in coverage of automobiles, homes and businesses. PIA members are Local Agents Serving Main Street AmericaSM. PIA’s web address is www.pianet.com.

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