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“Cadillac Tax” on High-Cost Group Health Plans Repealed

On December 20, 2019, the President signed into law the “Further Consolidated Appropriations Act, 2020” (the “Act”). Among many other things, the Act repeals the Affordable Care Act’s controversial 40% excise tax on high-cost health care (commonly referred to as the “Cadillac Tax”). From an economic perspective, the Cadillac Tax was intended to generate tax revenue and drive down utilization of unnecessary health care services. Originally scheduled to become effective in 2018, two separate legislative acts pushed the effective date to 2022. Given the Cadillac Tax’s unpopularity on both sides of the aisle, it seemed that it was only a matter of time before the tax was repealed.

The Act also repealed two other healthcare-related taxes established by the Affordable Care Act – the medical device tax and the tax on health insurance providers. Both of these taxes were also delayed or paused in prior legislation.

© 2020 Proskauer Rose LLP. National Law Review, Volume IX, Number 357

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About this Author

Damian A Myers Labor and employment law attorney proskauer rose
Senior Counsel

Damian Myers is an Associate in the Employee Benefits, Executive Compensation and ERISA Litigation Practice Center, resident in the Washington, DC office.

Damian represents public and private companies on matters related to employee benefits and executive compensation including compliance with ERISA, tax, corporate and securities laws and regulations affecting employee benefit plans, programs and arrangements. He concentrates on all aspects of compensation and employee benefit programs, including the design, implementation, administration and funding of non-qualified retirement...

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