House Votes to Eliminate the Cadillac Tax – Senate needs to Consider

On July 17, the House of Representatives passed a bill to repeal the Cadillac Tax. The bill passed overwhelmingly 419 for the bill to 6 against. The next step is for a similar bill to be considered and passed by the Senate.

The Cadillac Tax is an excise tax on high cost health plans. Included in the calculation of the tax are FSA, HRA, and HSA contributions. While the tax has been postponed a few times, it looms large for employers with account-based plans. If left intact, it may cause some employers to reconsider offering FSAs or significantly reduce their contributions to an HRA or HSA.

DBS has diligently met with members of the House of Representatives and Senate from both sides of the aisle to address the repeal of the Cadillac Tax. The tax negatively impacts middle class Americans who represent the majority of participants that benefit from FSAs, HRAs, and HSAs. It is a very unpopular tax and there is bi-partisan support to eliminate the tax.

The Senate has different procedural rules compared to the House. Our trade association believes there may be opportunities to add a Cadillac Tax repeal provision to another tax bill. DBS will keep you updated if a bill is introduced.