Industry praises delay of 'Cadillac plan tax,' passage of Policyholder Protection Act

Industry leaders praised Congress for passing an omnibus bill Dec. 18 that delays the Patient Protection and Affordable Care Act’s (PPACA) so-called “Cadillac plan tax” and also passes the Policyholder Protection Act (PPA).

The legislation, which is part of a larger bill that funds the federal government, was approved on both sides of the aisle in both the House (316-113 vote) and Senate (65-33).

Tax has been delayed until 2020

“The Big ‘I’ has been greatly concerned about the impact of PPACA’s 40 percent excise tax since the day PPACA was signed into law,” says Robert Rusbuldt, president of the Independent Insurance Agents & Brokers of America (IIABA or Big ‘I’) and CEO, in a statement. “We believe the two-year delay of the tax is an important first step, and independent agents around the country can rest assured that the Big ‘I’ will continue to fight to fully repeal the tax. We look forward to working with Congress in a bipartisan manner to ensure this tax never sees the light of day. Now that both the Senate and the House have passed this important legislation, we urge the President to promptly sign it into law.”

“PIA is encouraged by the two-year delay in the implementation of the ‘Cadillac Plan Tax’ that was negotiated as part of the budget agreement, however we will continue to push for outright repeal of this onerous tax on healthcare benefits,” says Jon Gentile, vices president of government relations for the National Association of Professional Insurance Agents. “The 40 percent excise tax on what was incorrectly termed ‘overly generous’ health plans in reality would impact moderate-benefit plans that middle class Americans rely on as well as the employer-sponsored health insurance market. We applaud this delay in the Cadillac Plan Tax and view it as a prelude to its repeal.”

Implementation of the 40 percent excise tax was scheduled to go into effect in 2018, in which PPACA levied a tax on health benefits that exceed an established cost.

The tax has been delayed until 2020.

Commitment to state regulation of the insurance market

Also wrapped into the omnibus bill, the Policyholder Protection Act (PPA) reaffirms that state insurance regulators have the authority to safeguard the capital of insurance companies that are part of larger diversified financial institutions. It also prevents the regulators from the Federal Deposit Insurance Corporation from transferring the assets of a state regulated insurance company or subsidiary to an affiliated bank if state insurance commissioners believe such a transfer would be harmful to policyholders. The PPA passed the full House in November, and through the Senate on Dec. 18.

“This legislation greatly improves the ability of state insurance regulators to protect policyholders by ensuring that insurance companies structured under larger financial firms are not held financially responsible for an affiliated bank’s failure or financial crisis,” Gentile says in a statement. “This common-sense consumer protection legislation is designed to ensure that the money set aside to pay insurance claims is not appropriated by the federal government to bail out ‘too big to fail’ financial institutions.”

“The passage of the ‘Policyholder Protection Act’ further exemplifies Congress’ commitment to state regulation of the insurance market,” says Charles E. Symington, Big “I” senior vice president for external and government affairs, in a statement. “This bill defends policyholder assets and ensures that carriers will be able to operate as intended by making the protection of policyholder assets their first priority.”