Fairfax County officials are moving to persuade Congress to change how so-called “Cadillac” health plans are defined under the Affordable Care Act, part of a spreading concern about projected tax penalties under the law that would not take effect until 2018.
On Tuesday, the Fairfax County board of supervisors voted to explore ways to push for changes in a section of the law that they argued unfairly punishes employers in more expensive areas of the country where health insurance premiums are higher.
The section that deals with Cadillac plans sets annual limits of as much as $23,000 on the cost of health-care coverage for a given employee, with some variations for different types of coverage. In 2018, a tax would be imposed on employers equaling 40 percent of the amount over those cost limits.
Fairfax County, which offers insurance to about 11,000 employees, projects that the penalty would be about $22 million.
“What this means for those individuals, businesses and governments in high cost-of-living regions, such as the Washington metropolitan area, is an unfair classification of our health-care plans as ‘Cadillac,’ ” County Supervisor Pat Herrity (R-Springfield) said in a motion approved unanimously Tuesday.
The result, he said, is that some employers may opt to terminate their coverage to avoid the tax.
That argument was made last fall by the Fairfax County Water Authority, a quasi-public entity that provides health-care coverage for 400 employees.
Since then, the water authority has begun campaigning for changes in the law that would base excise taxes on the level of coverage provided by health plans, instead of the cost.
“Such a modest modification of the ACA would recognize that what might be a ‘Cadillac’ plan in one location is not necessarily a ‘Cadillac’ plan in others,” Water Authority Chairman Philip Allin wrote last week in a letter to U.S. Sen. Tim Kaine (D-Va.).
A Kaine spokeswoman said the senator is open to the idea of pursuing such changes.
“Senator Kaine has always been open to ways to improve the Affordable Care Act. He has already voted to amend the law where necessary and will continue to review additional proposals as they are presented,” the spokeswoman said.
Although the tax is four years away, more municipalities are voicing concerns, said Paul Beddoe, deputy legislative director of the Washington-based National Association of Counties.
“There’s worry about it having an impact on the ability for counties to attract and retain employees,” said Beddoe, whose group represents 2,330 counties.