Alaska Senators sponsor legislation to repeal Cadillac tax

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Alaska’s two U. S. Senators are co-sponsoring legislation to repeal the so-called Cadillac tax, which will impact high priced employer health plans starting in 2018. Because health care is so expensive in Alaska, the tax could have a big impact in the state.

The tax was designed to hit high-end employer health plans that include especially rich benefits. But Senator Lisa Murkowski says in Alaska, it will impact health plans that are a lot more average.

“Our plans cost more because we are a high cost state with high cost insurance.”

Starting in 2018, employers will pay a 40 percent tax on health insurance plans that cost more than $10,200 a year for an individual and $27,500 dollars a year for families. The tax applies to any amount above those thresholds. The Kaiser Family Foundation estimates it will impact a quarter of individual plans nationwide in 2018.

Senator Murkowski says repealing the tax has a lot of support from Alaskan employers, including unions.

“It’s a very mixed group of Alaskans. It’s municipal entities, it’s the public entities like the school districts and it’s private small businesses out there as well.”

Murkowski says the legislation has bipartisan support in Congress. Two similar bills have been introduced in the U.S. House. But she says the Obama Administration is adamantly opposed to repealing the tax, in part because they’re counting on the revenue to help pay for other provisions in the Affordable Care Act.

Fred Brown is executive director of the Health Care Cost Management Corporation of Alaska, a non-profit that oversees about 40 health plans in Alaska and the Pacific Northwest. He says the tax will apply to most employer health plans in Alaska starting in 2018. Brown supports repealing the tax, or at least amending it.

“There should at a minimum be a carve out recognition of the geographical differential that we in Alaska and other high cost states experience.”

Brown says employers are already starting to plan for the tax as they design future employee health plans.