The Cadillac Tax is Counterproductive with Negative Implications for Employers & Employees



In my work as an employment attorney working with small to midsize companies in Connecticut, I regularly speak with HR and insurance professionals about strategies to implement affordable, effective health insurance programs. Almost universally, employers have stretched their resources to maintain these programs, at times committing more management contribution than fiscally prudent to avoid pushing onto employees an unmanageable cost burden that might cause employees to drop coverage for themselves and family.

Disrupting the current tax favored treatment afforded to employer-sponsored group health arrangements would be a destructive step interfering with longstanding effective mechanisms for delivery of health care, company recruitment, retention and compensation planning --not to mention the negative financial and morale implications for employees. Working families are already facing constrained budgets and will be faced with increasing costs for health care if the tax treatment of employer-sponsored coverage is changed. 

Delaying the "Cadillac Tax" is a welcome, but temporary fix, pushing off to another day the necessity of addressing the rising costs of health care. Retaining the Cadillac Tax, even if only in the future, is counterproductive as it leaves open the prospect of a crushing, unaffordable burden that will cause many employer programs to simply run out of money or slim down plans to avoid hitting the threshold to be subject to the tax.

It’s time to repeal the tax, and begin to address the cost of the health care delivery system. Continuing uncertainty and inconsistency should not be an option. "Repeal and replace the ACA" is a shallow campaign promise, not a solution. The health of companies, their employees and families hang in the balance.

Mark Soycher, CT SHRM State Council

Legislative Affairs Director



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