ERIC Makes Recommendations on the 40 Percent Excise Tax

The ERISA Industry Committee submits comments and recommendations to the IRS

For Immediate Release

Washington, DC – The ERISA Industry Committee (ERIC) today submitted comments and recommendations to the Internal Revenue Service (IRS) on potential rules regarding the Affordable Care Act’s 40 percent excise tax on employer-sponsored health coverage. ERIC previously submitted comments to the IRS in response to their request for guidance on implementation of the 40 percent excise tax in May.

As the only national trade association advocating solely for the employee benefit and compensation interests of the country’s largest employers, ERIC members sponsor some of the largest private group health plans in the country. They spend considerable amounts of resources – both financial and administrative –to provide high-quality, cost-efficient health care benefits to millions of workers and their families across the nation. The excise tax forces employers to choose between a health plan that is tailored to the needs of their workers and a plan designed to avoid the excise tax. That is why ERIC is advocating for congressional repeal of the excise tax.  In the interim, ERIC is working with government regulators on rules for the calculation and administration of the tax that avoid unintended consequences.

“The government should be encouraging employers to maintain high-quality coverage, not discouraging them from offering these valuable benefits by imposing restrictive and burdensome rules,” said Annette Guarisco Fildes, president and CEO, ERIC. “If this excise tax has to be imposed then employers should have the flexibility to pay the tax themselves, rather than parcel it out among their vendors. It is also important that the government let employers know the excise tax thresholds needed to calculate the tax well before the year in which the tax applies. How can we possibly alter our health coverage to further restrain costs, which ostensibly is the purpose of the tax, if we are not told all the relevant information in advance?”

To help alleviate the administrative and financial strain of the tax on large employers, ERIC also recommends that:

  • The IRS define the “taxable period” as either the plan year or the calendar year, at the option of the employer. Many employers use non-calendar plan years for their group health plans, and these changes will simplify compliance for this group of employers; and
  • The IRS craft rules in which all the relevant excise tax metrics, including the age and gender adjustment, are known well in advance of the taxable period.

You can read ERIC’s full comments to the IRS on the excise tax here, and our prior letter with recommendations here.

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All media inquiries to The ERISA Industry Committee should be directed to:

Kelly Broadway, 202.627.1918, kbroadway@eric.org

About the ERISA Industry Committee
ERIC helps America’s largest employers stay ahead of employee benefit policy. ERIC member companies are leaders in every sector of the economy, and we represent them in their capacity as sponsors of employee benefit plans for their own workforce. Only ERIC provides the combination of intel, expertise, collaboration, and lobbying that exclusively serves the interests of large employers who provide health, retirement, and compensation benefits to their nationwide workforce.