The highly contentious "Cadillac tax" — which has been put on hold until 2020 — has garnered bipartisan disapproval and has become an area of worry for many employers. But some health benefits experts say the increasing congressional inclination to reduce or eliminate tax breaks for employer-sponsored coverage could be even more perilous to the group insurance market, according to a report from Business Insurance.
"There's growing energy in Congress about tax reform and tax policy, and with employer-sponsored healthcare plans and retirement plans being the top two expenditures from a tax basis, it's front and center," said Tim Prichard, executive vice president and head of the national employee benefits practice at Wells Fargo Insurance Services USA, according to the report.
While it is unlikely any tax reform legislation will pass this year, bills that would impact the employer-sponsored health insurance tax exclusion have been introduced, according to the report. Should such bills come into law, some employers may be prompted to stop offering healthcare coverage to employees, health benefit experts say.
Most recently, Rep. Pete Sessions (R-Texas) and La. Sen. Bill Cassidy (R), in May introduced The World's Greatest Healthcare Plan Act of 2016, which would not repeal the Affordable Care Act, but would effectively limit the tax exclusion for employer-sponsored health plans to $2,500 per individual per year, plus $1,500 annually for dependents, according to the report.
"The prospects for sweeping tax reform next year are growing and growing," said Joel Wood, senior vice president of government affairs at the Council of Insurance Agents & Brokers in Washington, according to the report. "Any tinkering with the exclusion from taxation for benefit plans would be a wholly unwelcome development with repercussions throughout the entire employer community."
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