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Educators welcome legislation to repeal excise tax on high-cost health plans

Legislation comes as new report points to tax liabilities based on a worker’s age, gender and place of residence


WASHINGTON - April 28, 2015 -

The National Education Association today supported efforts to fix flaws in the Affordable Care Act that could disproportionally hurt women and older workers. Legislation introduced in the U.S. House of Representatives will make that fix by repealing an impending excise tax on high-cost health plans.

The Middle Class Health Benefits Tax Repeal Act, introduced by U.S. Rep. Joseph “Joe” Courtney (D-Conn.) during a press conference in Washington, would eliminate an excise tax imposed on high-cost health plans beginning in 2018. Without congressional action, a 40 percent tax would be imposed on the cost of health coverage above $10,200 for an individual and $27,500 for a family. The proposed bill already has the support of 60 members of Congress.

“While we continue to support the Affordable Care Act, the excise tax will disproportionally hurt women and older workers,” said NEA President Lily Eskelsen García. “America’s tax policy should not be a game of chance for working families. We should call this tax what it really is—an ‘Age-Gender-Geography Tax.’”

Earlier this month, NEA released a report analyzing the excise tax on high-cost health plans. The report, produced by the actuarial firm Milliman, finds that while the excise tax is often referred to as a tax on overly generous health benefits, it’s more likely to be a tax on other things, including where health plan members live, their age and their gender. The tax could disproportionately affect women, older employees and workers in high-cost insurance markets.

“In fact, as a new report shows, this tax on high-cost plans can randomly and unfairly cause hardship to women, American workers and their families,” added Eskelsen García. “We urge lawmakers to support this essential legislation to improve the Affordable Care Act.”

The excise tax wrongly equates high premiums with overly generous health benefits. It is so flawed that some health plans offering moderate benefits will face a steep tax, while plans with better benefits may not face any tax at all. Employers are already preparing to shift health care costs to workers—by cutting benefits or passing the tax liability to employees—even though the law doesn’t hold employees responsible for paying the tax.

“This tax will disproportionately hurt women, whose health plans tend be more expensive than those for their male counterparts,” said third-grade teacher Sheila Cohen, who serves as president of the Connecticut Education Association and was on hand for the press conference hosted by Rep. Courtney. “That means more than three-quarters of our educators in Connecticut and across the country will be particularly hurt by any increases in cost-sharing and decreases in coverage.

“Connecticut, like most of the country, still faces a gender wage gap,” continued Cohen. “So this tax would be another devastating blow to women working full time. In Connecticut, women’s salaries average 22 percent to 24 percent less than those of their male counterparts. This tax would further hurt women who have sacrificed lower salaries because of the gender gap. More to the point, the excise tax would be devastating for educators who have accepted salary freezes or cuts in order to save their health care coverage for themselves and their families. The excise tax would lead to cuts in needed benefits for the dedicated and committed educators who teach Connecticut’s children.”

To access the full Milliman report, please click here. To view the report in brief, please click here.

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The National Education Association is the nation's largest professional employee organization, representing more than 3 million elementary and secondary teachers, higher education faculty, education support professionals, school administrators, retired educators and students preparing to become teachers. Learn more at www.nea.org.

CONTACT: Miguel A. Gonzalez  202-822-7823, mgonzalez@nea.org