Companies continue to work tocontain rising healthcare costs, with the expense of prescriptiondrugs a key pressure point. But the biggest uncertainty foremployers going into the new year is the excise tax on high-costhealth benefits, also known as the Cadillac tax, which is due to beimplemented in 2020 unless Congress intervenes.

  • Update: The ECAA appropriations bill signed byPresident Trump on January 22 delays the Cadillac tax start datefrom 2020 to 2022. Read more here.

The Affordable Care Act mandated that, starting in 2018,companies pay a 40 percent excise tax on health coverage providedto employees if the costs of that coverage exceed a certainthreshold. In 2015, Congress postponed the tax's implementationdate to 2020.

A 2015 survey by Mercer showed that 34 percent of employerswould be subject to the tax in 2020 if they didn't make changes totheir plans. Businesses argue that the tax will increase theircosts and cause them to cut back on the coverage they provide toworkers.

Steve Wojcik, vice president of public policy at the NationalBusiness Group on Health, which represents large companies'interests on healthcare issues, noted that employer-provided healthcoverage is “the part of healthcare coverage that's working andfairly stable.

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Susan Kelly

Susan Kelly is a business journalist who has written for Treasury & Risk, FierceCFO, Global Finance, Financial Week, Bridge News and The Bond Buyer.