Advocating for Congress to Repeal the “Cadillac Tax”

Jim Klein, PresidentKaty Spangler, SVP, Health Policy

December 1, 2015

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40% “Cadillac” Tax

40% non-deductible tax on health plan costs exceeding $10,200/single and $27,500/family, beginning 2018Congress 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-consumptionAlso raised revenue to pay for other ACA provisions

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40% “Cadillac” Tax

Alliance to Fight the 40collaborative 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” TaxContact 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” TaxHow to Convey Your Message to Congress

Time sensitive -- phone calls or in-person meetings are important, followed by written communicationCheck www.congress.gov to determine if your Senator or Representative is a co-sponsor of one of the repeal billsCall the Capitol Hill switchboard at (202) 224-3121 and ask to be connected to the appropriate Senator or Representative’s officeWhen 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 endIf not, ask them to co-sponsor one of the bills

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40% “Cadillac” TaxHow 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” TaxCongressional 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” TaxCongressional 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” TaxSuggested 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 Kleinjklein@abcstaff.org

202-289-6700Katy Spangler

kspangler@abcstaff.org202-621-1977

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Advocacy by Nonprofits

Ronald M. JacobsChair, Political Law Practice

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501(c)(3) Organizations

May engage in lobbyingLobbying may not be a “substantial part” of a 501(c)(3)’s activities• Facts-and-circumstances test• 501(h) election

Low riskPolitical Activities: prohibited

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501(c)(4) & (6) Organizations

Unlimited lobbyingLobbying 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 lobbyingMembers may be restricted from lobbying (e.g., governmental entities)That applies to the members, not to the coalitionsIndividuals associated with members may lobby (e.g., grassroots) in personal capacity

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Questions?

Ronald M. JacobsChair, Political Law PracticeVenable LLP202-344-8215rmjacobs@venable.com