The Affordable Care Act’s (ACA) unpopular “Cadillac” tax has begun to worry unions. This tax imposes a 40% excise tax on health plans that cost more than $10,200 per year for individuals and $27,500 per year for families. The tax is scheduled to take effect in 2018. Health insurance providers will be liable for paying the Cadillac tax, but it is expected that the tax will be passed on to employers. While unions originally backed the ACA, they now realize that their generous healthcare plans will be the most heavily taxed.
Ohio Senator Sherrod Brown – arguably unions’ most friendly politician – recently introduced the American Worker Healthcare Tax Relief Act of 2015, which would repeal the Cadillac tax. The bill has nine co-sponsors, including democratic presidential candidate, Senator Bernie Sanders. The business community has long lamented the ACA. Now that unions have crossed over, it will be interesting to see whether an actual repeal is forthcoming. If not, companies must continue to ensure that they are not hit with the ACA tax penalty in 2018.