NEA releases report finding flaws with Affordable Care Act excise tax on high-cost health plans

The National Education Association released a report analyzing a key tax provision—the excise tax on high-cost health plans—of the Affordable Care Act. The report, produced by the actuarial firm Milliman, finds that although the excise tax is often referred to as a tax on overgenerous health benefits, it’s likely to be a tax driven by other things—including where health plan members live, their age and their sex. The tax could disproportionately affect women, older employees and workers in high-cost insurance markets.

The excise tax wrongly equates high premiums with overly generous health benefits. It is so flawed that some health plans offering moderate benefits will face a steep tax, while plans with better benefits may not face any tax at all. Employers are already preparing to shift health care costs to workers—by cutting benefits or passing the tax liability to employees—even though the law doesn’t hold employees responsible for paying the tax.

Kim Anderson, senior director of NEA’s Center for Advocacy and Outreach, said, “We continue to support the Affordable Care Act because it already has strengthened health benefits for kids and families and provided an opportunity for millions of Americans to obtain quality, affordable care. This new report, however, highlights a significant and damaging flaw in the excise tax. The excise tax on high-cost plans can randomly and unfairly cause hardship to American workers and their families. In fact, the excise tax will disproportionately hurt women and older workers.“We believe that it’s more accurate to call the excise tax on high-cost plans an ‘Age-Sex-Geography Tax.’ America’s tax policy should not be a game of chance for working families. Now that it’s clear that the excise tax will have arbitrary and negative consequences, Congress must repeal the excise tax to avoid inflicting harm on American workers and their families.”

To get the full Milliman report, go to nea.org

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