Three top Republicans have proposed paying for an alternative to the Patient Protection and Affordable Care Act (PPACA) by capping tax breaks for employer-sponsored health coverage.
The provision, part of the Patient Choice, Affordability, Responsibility and Empowerment (CARE) Act proposal, would set the tax exclusion at $12,000 for individual coverage and $30,000 for family coverage.
If workers received health benefits with a higher value than that, the Internal Revenue Service (IRS) would treat the excess value as ordinary taxable income.
Starting in 2018, the PPACA “Cadillac plan excise tax” is set to impose a 40 percent tax on the excess value in an individual health benefits package with a value over $10,200 and a family health benefits package with a value over $27,500.
The Patient CARE Act proposal backers — Rep. Fred Upton, R-Mich.; Sen. Richard Burr, R-N.C.; and Sen. Orrin Hatch, R-Utah — say their tax cap would be more fair than the PPACA Cadillac plan tax.
The Cadillac plan tax imposes the same 40 percent excise tax no matter how much or how little a worker earns, the proposal backers say.