Cadillac Tax Repealed

In a rare bipartisan move, the U.S. Congress passed a spending bill for 2020 that included a repeal of the so-called Cadillac tax.

The tax, which was an excise tax on costly health plans, was due to go into effect Jan. 1, 2022, after a number of delays as to its effective date in the face of objections from states where health insurance is most expensive, including Connecticut.

The bill was signed by the president on December 20, 2019.

Part of the Affordable Care Act, the tax charged health plans 40% of the cost of the plan above certain thresholds.

Employers across the country, but particularly in the Northeast and California were bracing for the tax, and implementing changes to health plans to circumvent or minimize its impact, including shifting more costs to employees.

The repeal appears to close the book on the tax once and for all.

About the author: Floyd Dugas is a senior partner with Berchem Moses PC and heads up the law firm’s municipal labor and employment practice.