Congress has postponed the Affordable Care Act’s healthcare excise tax (the so-called Cadillac tax) as part of the recent budget agreement. The tax, which has been delayed until 2020, forces employers to pay a 40% levy on healthcare plans considered “generous” – anything above $10,200 for an individual or $27,500 for families.
This tax could play a major role in future negotiations as employers attempt to offset it with small or no wage and retirement increases. It could also force unions to eliminate healthcare plans that are above the caps, downgrading health benefits.
As currently written, the ACA caps don’t take into account geographical differences in medical costs – bad news for anyone living in high-cost areas such as California. In addition, caps are tied to standard inflation, not medical inflation, which rises at about twice the rate of standard inflation.
Experts predict that a majority of plans will be subject to the excise tax in within a decade, placing downward pressure on wages and constricting access to decent, affordable healthcare for working families.