by Colleen Flaherty
This week, Congressman Joe Courtney (D-Conn.) introduced legislation to protect health insurance for working families across the country. The Middle Class Health Benefits Tax Repeal Act would repeal an excise tax, originally known as the “Cadillac Tax,” for health care coverage that exceed a certain amounts.
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“The excise tax is a poorly designed penalty that will put a dent in the pocketbooks of many families and businesses with health insurance plans that do not resemble the ‘Cadillac’ plans originally targeted when this policy was adopted—instead, the excise tax will punish people living in higher cost areas, with ‘Ford Focus’ level plans,” said Courtney.
The bill would repeal a 40 percent excise tax of employer-sponsored health coverage which will go into effect in 2018. The tax is thought to go after high-end and overly-generous health plans. In reality, the tax would have a disproportionate impact on older workers, women and workers in high-cost regions.
“The excise tax is not a smart reform—it is a flawed, one-size-fits-all penalty that will degrade workers’ benefits, lead employers to choose less comprehensive plans and force families to pay more out-of-pocket health care costs,” said Courtney. “Fortunately, we have the opportunity to eliminate this tax before it goes into effect, and I am proposing this legislation to ensure that America’s working families are protected from an uneven, unnecessary cut to their hard-earned health care benefits.”
According to a report produced by the actuarial firm Milliman, 70 percent of variance in health insurance premiums is explained by geographic location. Other factors, such as age and sex, have a greater impact than an overly generous compensation package. In fact, only six percent of variance in premiums is due to the comprehensiveness of the benefits.
For many workers and their families, an unfair tax on their high health insurance premiums may also have a greater effect on public sector workers, such as educators.
“Over the course of their careers, many public education employees have traded salary increases for the long-term security of a comprehensive health plan and have paid their share of premiums,” said NEA Government Relations Director Mary Kusler. “For employers to tell hard-working educators that their benefits will be cut or they will have to pay whatever excise taxes are due would unfairly penalize them. In addition, limiting or capping the tax exclusion for employer-sponsored health coverage would have a disastrous effect on public education.”
“While NEA continues to back the Affordable Care Act, we believe this bill provides a needed improvement to ensure continued access to the care our children and families deserve.”