On April 28, 2015, Representative Joe Courtney (D-CT) introduced a bill, the Middle Class Health Benefits Tax Repeal Act (H.R. 2050), to repeal the 40 percent excise tax on high cost group health insurance coverage. The excise tax, commonly referred to as the “Cadillac tax,” is scheduled to become effective in 2018.  It applies to individual health plans worth more than $10,200 and family plans worth more than $27,500 and thus is hardly expected to impact only the wealthiest policyholders. Representative Frank Guinta (R-NH) introduced a similar bill, the “Ax the Tax on Middle Class Americans' Health Plans Act” (H.R. 879), in February.

The excise tax, established under Internal Revenue Code Section 4980I, applies to "applicable employer-sponsored coverage" in excess of statutory thresholds (in 2018, $10,200 for self-only coverage and $27,500 for family coverage). While the U.S. Treasury Department and Internal Revenue Service (IRS) have not yet issued rules for complying with the tax, Notice 2015-16, issued by the IRS in February, discusses the definition of applicable coverage, how the cost of applicable coverage is determined, and the application of the annual statutory dollar limit to the cost of applicable coverage.  The notice requests public comments by May 15, 2015.

Because efforts to repeal this health insurance excise tax have strong bipartisan support, it is possible that the Cadillac tax could well be on its way out before it is ever implemented.

To view Representative Courtney's press release, please click here.


Jump to Page