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Letter to the House on the Middle Class Health Benefits Tax Repeal Act

April 28, 2015

Dear Representative:  

On behalf of the three million members of the National Education Association (NEA) and the students they serve, we write to offer our views and to urge you to support the Middle Class Health Benefits Tax Repeal Act. We commend Representative Joe Courtney (D-CT) for his tremendous leadership in working to protect working families’ health insurance coverage. We strongly support the Affordable Care Act which ensures health care access for millions of children across the country and provides an opportunity for Americans to obtain quality, affordable care. While NEA continues to back the Affordable Care Act, we believe this bill provides a needed improvement to ensure continued access to the care our children and families deserve.  

This bill would repeal a 40 percent excise tax on the cost of employer-sponsored health coverage that exceeds certain amounts – generally $10,200 for individual coverage and $27,500 for family coverage. The excise tax provision of the Affordable Care Act, which will go into effect in 2018, is often thought to only affect high-end and overly-generous health plans. In reality, however, this tax will have an indiscriminate impact on a broad range of individuals and families who, for reasons they cannot control, have health plan premiums that already or soon will reach the tax’s cost thresholds. 

Over the course of their careers, many public education employees have traded salary increases for the long-term security of a comprehensive health plan and have paid their share of their premiums.  For employers to tell hard-working educators now that their benefits will be cut or they will have to pay whatever excise taxes are due would unfairly penalize them.  In addition, limiting or capping the tax exclusion for employer-sponsored health coverage would have a disastrous effect on public education. 

A report produced by the actuarial firm Milliman finds that although the excise tax is often referred to as a tax on overly-generous health benefits, it’s likely to be a tax driven by other things— factors such as age, sex, and geography, which can have a much greater influence on the cost of a plan than the plan’s benefit structure.  

Employers are already enacting measures to avoid potential tax liabilities by cutting benefits, which will likely manifest in the form of increased deductibles, copays, and coinsurance or passing the tax liability to employees—even though the law doesn’t hold employees responsible for paying the tax.  

We believe this bill is an important and necessary improvement to the Affordable Care Act. We urge you to support this essential legislation.  

Sincerely,  

Mary Kusler
Director, Government Relations