'Cadillac tax' could be latest threat to Affordable Care Act

Tax doesn't go into effect until 2018, but controversy lingers

The Affordable Care Act turned five this year, but one major provision has yet to go into effect. Come 2018, the tax on so-called Cadillac plans begins, and many expect it to be the next big debate to plague the ACA, reported Politico.

The tax on such plans--those exceeding $10,200 for an individual and $27,500 for families--initially was introduced to slow the healthcare spending growth. While the name "Cadillac tax" may suggest otherwise, experts believe about one-third of employers will end up incurring the first-ever tax on healthcare benefits, according to Politico.

One selling point for employers offering health insurance to employees has been the idea that employers can write off from their taxes the cost of offering coverage. However, it's possible that these open-ended tax breaks employers receive for providing coverage actually drive up healthcare costs.

What's more, not only will the tax impact traditional health insurance, but it could eventually hit health savings and flexible spending accounts as well as supplemental insurance plans, noted Politico.

However, should the opportunity arise, the tax may be difficult to repeal. The provision is projected to generate $87 billion in its first decade, with revenue increasing enough over time to cover the cost of providing insurance subsidies on the exchanges. Ultimately, the provision--like so many others in the ACA--was intended to promote fiscal responsibility, White House spokeswoman Jessica Santillo told Politico.

Employers are doing what they can to get out of paying the Cadillac tax, FierceHealthPayer previously reported. For instance, many business have been pushing their workers out of high-cost plans and into ones with larger deductibles while also offering them health savings accounts, noted Politico.

"We continue to support the Affordable Care Act," Kim Anderson, senior director of the National Education Association's Center for Advocacy and Outreach, told Politico. But "the excise tax on high-cost plans can randomly and unfairly cause hardship to American workers and their families. Congress must repeal the excise tax."

For more:
- here's the Politico article

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