Health Benefits Taxation

Beginning with the 2020 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 $10,200 for employee-only and $27,500 for family coverage, adjusted for inflation annually(projected to be ($10,800/$29,100 in 2020). If it takes effect, or in the unlikely event that Congress limits the federal income tax exclusion for employer-sponsored coverage, it would both (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 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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