In an effort to preserve one of the key elements of the Affordable Care Act (ACA), President Obama will propose changes to the unpopular “Cadillac Tax” on high end health insurance plans.
In it’s original form, the excise tax (or “Cadillac Tax” as it’s become known as) was meant to add an additional 40% tax on high end health plans (usually gold or platinum). This tax was a key part in financing the ACA’s subsidies and expansion, but is not set to take effect until 2020. On the political field, it has met with heavy resistance from both union leaders and employers who feel they are being punished for offering generous health benefits to their employees.
Obama’s new proposal would raise the threshold at which plans are subject to the tax in states with higher health care costs. Instead of a single threshold across the country, employers could offer more generous coverage in states where “gold”-level plans offered on the ACA’s insurance exchanges cost more than the Cadillac tax limits.
It’s hoped the end result will appease opponents while keeping one of the Obama Administration’s flagship policies intact.