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The House of Representatives passed legislation on Wednesday to repeal the Cadillac tax. The Cadillac tax is part of the Affordable Care Act, a 40% excise tax on the excess cost of employer-sponsored health plans that exceed certain thresholds. The tax was put into place to help control health care spending and generate revenue for the marketplace plans.
Congress has already delayed the Cadillac tax’s implementation in 2015 and 2018. It was slated to go into effect in 2022. Lawmakers had concerns that the tax may cause employers to reduce their health benefits or make employees pay even more. There were also concerns that the tax may unfairly target those in poor health who have costly health plans or people who live in places where health costs are higher.
The Kaiser Family Foundation recently released an analysis of the so-called Cadillac tax, concluding that 21% of employers offering health benefit plans could be affected by the tax when it goes into effect in 2022 – and that will increase to 37% by 2030.1
Next, the bill will move on to the Senate. If passed, it will then go to the President to be signed into law.
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