March 6, 2017
House Republicans just released the latest version of the repeal and replace legislation.
It does NOT include changes to the tax exclusion for employer provided plans!
We consider this a MAJOR victory and is the direct result of intense lobbying efforts from the broker and employer community.
Cadillac Tax Implications
The challenge to repeal the Cadillac Tax, however, continues. The legislation delays the Cadillac Tax from 2020 to 2025. Most predications indicate that a significant number of group health plans would trigger the 40 percent excise tax by 2025 if there aren’t any adjustments made to the threshold.
The current Cadillac Tax threshold is $10,200 for an individual plan and $27,500 for families. The Council continues to strongly oppose the tax and will work for its repeal. Last year, more than 2/3 of the House of Representative supported the repeal, and 90 senators voted to repeal the tax.
Other significant elements of the legislation
- Puts income limits on eligibility for new tax credits that help people pay for coverage.
- Delays repeal of many of the ACA’s tax increases until 2018, a year later than previous versions.
- Creates new tax credits reduced for individuals with incomes above $75,000 and households earning more than $150,000. The tax credits would disappear completely for individuals making more than $215,000, with a $290,000 cap for joint filers.
- Phases out the ACA’s Medicaid expansion. Instead of the current open-ended federal entitlement, states would get capped payments based on Medicaid enrollment. But the latest version tweaks the inflation calculator to slow spending growth in future years.
- Repeals individual and employer mandates. Employer reporting requirements will have to be streamlined or eliminated through regulatory procedures, as such legislative changes won’t meet the reconciliation requirements in the Senate.
The legislation is rumored to be marked up in both the House Ways & Means and Energy & Commerce Committees this week and could be voted on the House floor very soon.
Stay tuned for a deeper analysis and more information as the situation evolves. In the meantime, please contact Joel Wood at joel.wood@ciab.com or Joel Kopperud at joel.kopperud@ciab.com for more information.