May 2015

CEA Joins Congressman Courtney to Fight Excise Tax on Health Benefits

Tax would hurt educators

CEA President Sheila Cohen joined U.S. Congressman Joe Courtney late last month in Washington, D.C., as he unveiled legislation that would eliminate the excise tax on higher-cost health insurance plans scheduled to take effect in 2018. The Middle Class Health Benefits Tax Repeal Act has 65 cosponsors and would repeal the tax that unfairly burdens Connecticut educators and other members of the middle class around the country.

"The excise tax is a poorly designed penalty that will put a dent in the pocketbooks of many families and businesses with health insurance plans that do not resemble the 'Cadillac' plans originally targeted when this policy was adopted — instead, the excise tax will punish people living in higher cost areas, with 'Ford Focus' level plans," Courtney said.

Speaking at the press conference announcing the new legislation Cohen said, "The excise tax would be devastating for educators who have accepted salary freezes or cuts in order to save their health care coverage for themselves and their families. The excise tax would cut needed benefits for the dedicated and committed educators who teach Connecticut's children."

If legislation is not passed, beginning in 2018 all health insurance benefits above $10,200 for individual coverage and $27,500 for family coverage will be subject to a 40 percent tax.

The intent of this tax, part of the Affordable Care Act, was to discourage plans that are high-cost due to overly-generous benefits. However, a study by the Milliman Consulting Firm has shown that the level of benefits in a plan play less of a role in its cost than do the geography, age, and gender of plan participants.

Health plans with a higher concentration of women tend to be higher-cost than plans that have more male participants, and the tax is indexed to general cost-of-living measures, not to growth in health care costs. Since Connecticut's teaching workforce is three-quarters female and Connecticut is a high cost-of-living state, the excise tax would present a serious burden to educators here.

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