Congress voted Dec. 18 to delay the beginning of the so-called “Cadillac tax” by two years — to 2020. The Cadillac tax, which is part of the 2010 Affordable Care Act, is a 40 percent excise tax on the amount of employer health care premiums above $10,200 a year for individual coverage or $27,500 for family coverage. It was scheduled to take effect in 2018. In theory, it’s supposed to force employers to restrain health insurance cost increases, but unions argued all along that it would cause employers to shift costs to workers through higher co-pays and deductibles. Employer surveys from the Kaiser Family Foundation confirm that employers are already doing that in order to avoid triggering the tax.
Now, the AFL-CIO and other critics of the tax will have two more years to fight for its permanent repeal in Congress.
The Obama Administration opposed the delay, but it passed as part of a much larger bill that funds much of the federal government and also makes a variety of tax credits permanent, including credits for wind and solar development. The bill also placed a two-year moratorium on Obamacare’s existing 2.3 percent tax on medical devices.