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ECFC: Cadillac Plan Tax May Have Broad Impact

by staff Writer

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The “high-cost plan excise tax” in the Senate health bill could crowd vision, dental and specified disease insurance products out of benefits packages, according to the Employers Council on Flexible Compensation.

David Carver, executive director of the ECFC, Washington, and chairman of the group, have written to members of the Senate to ask for change the elimination or modification of the high-cost plan excise tax provision, which is often described as the “Cadillac plan” tax.

The provision is in H.R. 3590, the Patient Protection and Affordable Care Act of 2009.

The H.R. 3950 would impose a 40% excise tax on health benefits with value over a certain level.

The Senate definition of the benefits to be included in high-cost plan calculations many different types of benefits, such as flexible spending accounts and vision, dental and specified disease coverage, Carver and Triplett write.

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“We believe that the provision as currently drafted is overly broad,” Carver and Triplett write.

The Senate should include only the value of primary health coverage in determining when to impose the excise tax, Carver and Triplett write.

Carver and Triplett also are objecting to a $2,500-per-year cap on FSA contributions included in H.R. 3590. The cap would not be indexed for inflation.

“The proposed $2,500 FSA cap is too low, particularly for patients with a chronic illness who, even with comprehensive coverage, face very high out of pocket costs,” Carver and Triplett write. “FSAs also help patients pay for services not covered by insurance. For example, parents of children with autism often rely on FSAs to help pay for therapies.”

The Senate ought to eliminate the FSA cap entirely, but, if it must impose a cap, it ought to increase the cap to a higher level, such as $5,000, and it ought to index the cap for inflation, Carver and Triplett write.