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Congress Delays “Cadillac Tax”

On Monday, Congress made headlines by passing legislation to end the three-day shutdown that had significantly curtailed the federal government’s operations and activities across the country. When passing this bill, Congress included a two-year delay of the high-value health insurance tax, or “Cadillac Tax,” which would have placed a 40% excise tax on high-value health insurance plans. The “Cadillac Tax” is now set to take effect in four years in 2022.

When the Patient Protection and Affordable Care Act (PPACA; P.L. 111-148) was signed into law in 2010, it created several new taxes including one which would have placed a 40% tax on certain high-value health insurance plans. While the “Cadillac Tax” did include a higher value threshold for health insurance plans for firefighters and other high-risk professions, it likely would not have been enough to protect the health insurance plans that fire departments typically offer to firefighters and emergency medical services (EMS) personnel.

Prior to Congress passing this legislation on Monday, the Internal Revenue Service (IRS) had planned to implement the tax in 2020. The two-year delay approved by Congress now will push the tax’s effective date to 2022.

The IAFC has worked for several years with other national fire service and local government associations to oppose implementation of this tax. In 2015, the IAFC offered detailed concerns (pdf) to the IRS regarding possible negative impacts that the “Cadillac Tax” could have on benefits for fire and EMS personnel.

The IAFC will continue working to secure a full repeal of the Cadillac Tax and protect health insurance benefits for all fire and EMS personnel.

Evan Davis is the IAFC's government relations manager and liaison to the EMS Section.

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