Employee Benefits Tax Puts More Than 2.6 Million Jobs At Risk

Last week the National Association of Manufacturers (NAM) released a study that found the Affordable Care Act’s employee benefits tax, sometimes referred to as the “Cadillac tax,” will have disastrous consequences for the American manufacturing industry and American workers. 

According to the study, the 40 percent tax on high-end employee health care plans could reduce economic growth by 1.7 percent by 2035, result in up to 2.6 million job losses over the next 20 years and reduce real personal income by $3,800 per household. The NAM said, “While the tax is intended to target high-end insurance plans, it will hit the middle class as well as employers across the board. The accelerating nature of the tax will prompt many employers to continually increase cost sharing and/or eliminate benefits. On-site clinics, on-site pharmacies, wellness programs, flexible spending accounts and health savings accounts could all be in jeopardy. Virtually all employers would end up facing the tax at some point.” 

The employee benefits tax is scheduled to go into effect in January 2018. However, as part of a bill to extend more than 50 tax credits and deductions, members of Congress are currently contemplating a two-year delay in implementation. Lawmakers should finish negotiating that plan this week.