policy

Health Benefits Taxation

Health benefits provided through employers currently enjoy tax-favored status for employees and employers. Unless Congress again delays it, beginning with the 2022 tax year, the ACA requires plan sponsors and insurers to pay a 40% excise tax (known as the “Cadillac” tax) on the excess cost of employer-sponsored health coverage provided to employees—amounts over $11,100 for employee-only and $29,750 for family coverage in 2022, adjusted for inflation annually. If it takes effect or Congress enacts legislation to tax benefits, either action would (1) increase the cost of providing group health plan coverage and (2) impede plan sponsors’ ability to implement and maintain innovative plan features that, in the long run, will improve health care quality and lower the overall cost of health coverage. Therefore, the Business Group supports repeal of the excise tax and maintaining the current tax-advantaged treatment of employer-sponsored health coverage.

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Featured Resources

Joint Letter from Business Groups Opposing Excise Tax and Taxation of Benefits Joint Letter from Business Groups Opposing Excise Tax and Taxation of Benefits
This letter details the Business Group’s positions on the tax treatment of health benefits.

Health Benefits Tax Calculator Download Health Benefits Tax Calculator
As Congress considers proposals to change the favorable tax treatment of employer-sponsored benefits, this tool helps you estimate new tax liability for your company and employees under three scenarios: eliminating the tax exclusion for health benefits, capping the exclusion, or eliminating all employer-sponsored coverage.

ACA Boot Camp: Fees, Taxes, and Penalties ACA Boot Camp: Fees, Taxes, and Penalties
This webinar provides an overview of the ACA fee and tax provisions, including a discussion of the ACA excise tax on employer-sponsored health coverage.

 

 

Also of Interest

Letter to Senate Finance Committee Chairman Orrin Hatch (R-UT) with Recommendations for the Senate as it Considers the American Health Care Act of 2017
The National Business Group on Health urges the Senate to repeal the 40% excise tax on health benefits, or at a minimum delaying it to 2026.

 

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