Advocating for Congress to
Repeal the “Cadillac Tax”
Jim Klein, President
Katy Spangler, SVP, Health Policy
December 1, 2015
40% “Cadillac” Tax
40% non-deductible tax on health plan costs
exceeding $10,200/single and $27,500/family,
beginning 2018
Congress created the 40 Percent Tax to “bend
the cost curve” by restraining health care
spending – reflecting a belief of economists
that health plans providing very high levels of
coverage promote over-consumption
Also raised revenue to pay for other ACA
provisions
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40% “Cadillac” Tax
Alliance to Fight the 40
collaborative effort with
private and public sector
employers, unions, consumers
Repeal bills supported by 300+ bipartisan
members of Congress
•
•
•
•
H.R. 2050 – Rep. Courtney (D-CT)
H.R. 879 – Rep. Guinta (R-NH)
S. 2045 – Sens. Heller (R-NV) and Heinrich (D-NM)
S. 2075 – Sen. Brown (D-OH)
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40% “Cadillac” Tax
Contact Congress Before December 11
Congress is expected to adjourn for the year on or
before December 11 – we need “all hands on deck”
advocating that repeal of the tax be attached to any
moving legislation
Some members of Congress contend that this is
strictly a "union issue“, so it is especially
important that Congress understand that repeal of
the tax is a corporate priority. Companies should
work with appropriate colleagues within their
organization to convey the message.
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40% “Cadillac” Tax
How to Convey Your Message to Congress
Time sensitive -- phone calls or in-person meetings are
important, followed by written communication
Check www.congress.gov to determine if your Senator or
Representative is a co-sponsor of one of the repeal bills
Call the Capitol Hill switchboard at (202) 224-3121 and
ask to be connected to the appropriate Senator or
Representative’s office
When connected to the office, ask to speak with the
Legislative Director or health or tax staff member
If Senator/Representative is a co-sponsor of a repeal bill,
thank them and urge that they push now to add repeal to
some "must do" legislation before year end
If not, ask them to co-sponsor one of the bills
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40% “Cadillac” Tax
How to Convey Your Message to Congress
Describe the presence of your Coalition in the State or
Congressional District:
•
Coalition represents XX employer providers of health benefits
covering YY people in the State or Congressional
District/surrounding districts
•
Describe composition of your Coalition membership (e.g. both
public and private employers; companies of many sizes and
industries)
Reference the talking points (see next slides), or your own
message, on why the 40% tax should be repealed
Ask them to follow up with you to let you know what action the
Senator or Representative has taken on your request and
provide them your contact information
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40% “Cadillac” Tax
Congressional Talking Points
The tax will eventually affect virtually all Americans
with employer-sponsored health coverage. Because the
tax is indexed to the Consumer Price Index, which rises
more slowing than health care inflation, every year an
increasing number of health plans will be subject to the
tax.
The tax penalizes employers for many factors that are
out of their control. The tax unfairly targets employers
that have a higher number of workers with chronic or
serious diseases or those with larger families -- and
employers with locations in high-cost areas or in specific
industries, such as manufacturing or law enforcement.
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40% “Cadillac” Tax
Congressional Talking Points
The tax applies to a number of benefits that help keep
employees healthy and control costs. These include on-site
medical clinics, certain wellness and employee assistance
plans, health savings account contributions, health
reimbursement arrangements, flexible spending accounts, and
other pre-tax health benefits.
The tax must be repealed now. Recent studies found
employers have already increased deductibles and
implemented other cost-sharing in 2015, to avoid being on a
trajectory to trigger the tax when it goes into effect in 2018.
A strong bipartisan majority in Congress supports
repealing the Cadillac tax. 277 members of the House of
Representatives and 36 Senators have cosponsored bipartisan
legislation to repeal the tax.
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40% “Cadillac” Tax
Suggested Prebuttals
Repealing the tax is too expensive. While repealing the tax is expected to
cost $91 billion over 10 years, 75% of that is estimated to come from
greater income tax collection as employers shift health costs to taxable
wages. This is not something employers are doing, so most of this
revenue will never materialize.
Repealing the tax would undermine the ACA. Over 300 members of
Congress, nearly half of them Democrats, support repealing the tax.
The repeal is to protect the health benefits of over 175 million
Americans. This is not a debate about whether the ACA is good or
bad.
Repealing the tax will increase health care costs. Economists and other
supporters of the tax think it will achieve savings in the health care
system, but in reality it isn’t doing anything to lower the cost of MRIs
or hip replacements. Instead, it is forcing employers reluctantly to
shift costs to employees in the form of higher deductibles and copays.
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Find us on the Web:
http://www.americanbenefitscouncil.org
http://www.fightthe40.com
Jim Klein
[email protected]
202-289-6700
Katy Spangler
[email protected]
202-621-1977
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Advocacy by Nonprofits
Ronald M. Jacobs
Chair, Political Law Practice
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501(c)(3) Organizations
May engage in lobbying
Lobbying may not be a “substantial
part” of a 501(c)(3)’s activities
• Facts-and-circumstances test
• 501(h) election
Low risk
Political Activities: prohibited
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501(c)(4) & (6) Organizations
Unlimited lobbying
Lobbying Tax:
• Must notify members of percentage of dues
that are used for lobbying


If 90% of members do not deduct dues (e.g.,
because they are 501(c)(3)s or governments), no
notice required
No notice if less than $2,000 year on in-house
lobbying expenses
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Members’ Members
Members may have policies governing
lobbying
Members may be restricted from
lobbying (e.g., governmental entities)
That applies to the members, not to the
coalitions
Individuals associated with members
may lobby (e.g., grassroots) in personal
capacity
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Questions?
Ronald M. Jacobs
Chair, Political Law Practice
Venable LLP
202-344-8215
[email protected]
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