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Congressional Budget Deal Repeals ‘Cadillac Tax’ on Health Plans

December 20, 2019

By Steve Wishnia and Neal Tepel

WASHINGTON—The bipartisan deal reached this week to continue funding the federal government will repeal the 40% tax on expensive health-care plans, nicknamed the “Cadillac tax.” The tax, imposed by the Affordable Care Act in 2010 in order to encourage employers to lower health-care costs by making it more costly to provide fuller benefits, was never actually levied, as an alliance of union supporters and Obamacare foes got it postponed until 2022. “Working people won a major bipartisan victory today with a permanent repeal of the ‘Cadillac tax,’” AFL-CIO President Rich Trumka said in a statement Dec. 17. “This ill-advised and misleadingly named tax was threatening the health care security of millions of working people—pushing employers to hollow out benefits while driving up deductibles and copays. It is simply wrong to penalize workers who have successfully negotiated quality insurance coverage.” The budget agreement also repeals Obamacare taxes on medical-device sales and health-insurance policies in general. The congressional Joint Committee on Taxation estimated Dec. 17 that repeal would reduce the revenue funding Obamacare by $373.3 billion over 10 years: $197 billion from the “Cadillac tax,”  $25.5 billion from the 2.3% medical-device tax, and $150.8 billion from the health-insurance tax. Read more

December 20, 2019

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