Two researchers from the City University of New York (CUNY) School of Public Health have concluded that the Cadillac Tax will hit middle-class families the hardest, according to new research published in the March 2016 issue of the International Journal of Health Services.
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The tax, now set to go into effect in 2020, would impose a 40% excise tax on insurers of employer-sponsored health plans with total values that exceed $10,200 for individual coverage and $27,500 for family coverage.
While the tax was designed to penalize “luxury” health plans (hence the nickname) and reign in tax subsidies for employment-based insurance, many nonluxury plans are expected to fall into this category due to rapidly rising healthcare costs. Accordingly, there have been numerous calls for repeal from both sides of the political aisle.
The CUNY researchers concluded that the tax subsidies are neither markedly regressive nor progressive. According to the research abstract, “the Cadillac Tax will disproportionately harm families with (2009) incomes between $38,550 and $100,000, while sparing the wealthy.”