1. Advocating for Congress to Repeal the “Cadillac Tax” Jim Klein, President Katy Spangler, SVP, Health Policy December 1, 2015

2. 2 40% “Cadillac” Tax 40% non-deductible tax on health plan costs exceeding $10,200/single and $27,500/family, beginning 2018 Congress created the 40 Percent Tax to “bend the cost curve” by restraining health care spending – reflecting a belief of economists that health plans providing very high levels of coverage promote over-consumption Also raised revenue to pay for other ACA provisions

3. 3 40% “Cadillac” Tax Alliance to Fight the 40 collaborative effort with private and public sector employers, unions, consumers Repeal bills supported by 300+ bipartisan members of Congress H.R. 2050 – Rep. Courtney (D-CT) H.R. 879 – Rep. Guinta (R-NH) S. 2045 – Sens. Heller (R-NV) and Heinrich (D-NM) S. 2075 – Sen. Brown (D-OH)

4. 4 40% “Cadillac” Tax Contact Congress Before December 11 Congress is expected to adjourn for the year on or before December 11 – we need “all hands on deck” advocating that repeal of the tax be attached to any moving legislation Some members of Congress contend that this is strictly a "union issue“, so it is especially important that Congress understand that repeal of the tax is a corporate priority. Companies should work with appropriate colleagues within their organization to convey the message.

5. 5 40% “Cadillac” Tax How to Convey Your Message to Congress Time sensitive -- phone calls or in-person meetings are important, followed by written communication Check www.congress.gov to determine if your Senator or Representative is a co-sponsor of one of the repeal bills Call the Capitol Hill switchboard at (202) 224-3121 and ask to be connected to the appropriate Senator or Representative’s office When connected to the office, ask to speak with the Legislative Director or health or tax staff member If Senator/Representative is a co-sponsor of a repeal bill, thank them and urge that they push now to add repeal to some "must do" legislation before year end If not, ask them to co-sponsor one of the bills

6. 6 40% “Cadillac” Tax How to Convey Your Message to Congress Describe the presence of your Coalition in the State or Congressional District: Coalition represents XX employer providers of health benefits covering YY people in the State or Congressional District/surrounding districts Describe composition of your Coalition membership (e.g. both public and private employers; companies of many sizes and industries) Reference the talking points (see next slides), or your own message, on why the 40% tax should be repealed Ask them to follow up with you to let you know what action the Senator or Representative has taken on your request and provide them your contact information

7. 7 40% “Cadillac” Tax Congressional Talking Points The tax will eventually affect virtually all Americans with employer-sponsored health coverage. Because the tax is indexed to the Consumer Price Index, which rises more slowing than health care inflation, every year an increasing number of health plans will be subject to the tax. The tax penalizes employers for many factors that are out of their control. The tax unfairly targets employers that have a higher number of workers with chronic or serious diseases or those with larger families -- and employers with locations in high-cost areas or in specific industries, such as manufacturing or law enforcement.

8. 8 40% “Cadillac” Tax Congressional Talking Points The tax applies to a number of benefits that help keep employees healthy and control costs. These include on-site medical clinics, certain wellness and employee assistance plans, health savings account contributions, health reimbursement arrangements, flexible spending accounts, and other pre-tax health benefits. The tax must be repealed now. Recent studies found employers have already increased deductibles and implemented other cost-sharing in 2015, to avoid being on a trajectory to trigger the tax when it goes into effect in 2018. A strong bipartisan majority in Congress supports repealing the Cadillac tax. 277 members of the House of Representatives and 36 Senators have cosponsored bipartisan legislation to repeal the tax.

9. 9 40% “Cadillac” Tax Suggested Prebuttals Repealing the tax is too expensive. While repealing the tax is expected to cost $91 billion over 10 years, 75% of that is estimated to come from greater income tax collection as employers shift health costs to taxable wages. This is not something employers are doing, so most of this revenue will never materialize. Repealing the tax would undermine the ACA. Over 300 members of Congress, nearly half of them Democrats, support repealing the tax. The repeal is to protect the health benefits of over 175 million Americans. This is not a debate about whether the ACA is good or bad. Repealing the tax will increase health care costs. Economists and other supporters of the tax think it will achieve savings in the health care system, but in reality it isn’t doing anything to lower the cost of MRIs or hip replacements. Instead, it is forcing employers reluctantly to shift costs to employees in the form of higher deductibles and copays.

10. 10 Find us on the Web: http:// www.americanbenefitscouncil.org http://www.fightthe40.com Jim Klein jklein@abcstaff.org 202-289-6700 Katy Spangler kspangler@abcstaff.org 202-621-1977

11. 11 Advocacy by Nonprofits Ronald M. Jacobs Chair, Political Law Practice

12. 12 501(c)(3) Organizations May engage in lobbying Lobbying may not be a “substantial part” of a 501(c)(3)’s activities Facts-and-circumstances test 501(h) election Low risk Political Activities: prohibited

13. 13 501(c)(4) & (6) Organizations Unlimited lobbying Lobbying Tax: Must notify members of percentage of dues that are used for lobbying  If 90% of members do not deduct dues (e.g., because they are 501(c)(3)s or governments), no notice required  No notice if less than $2,000 year on in-house lobbying expenses

14. 14 Members’ Members Members may have policies governing lobbying Members may be restricted from lobbying (e.g., governmental entities) That applies to the members, not to the coalitions Individuals associated with members may lobby (e.g., grassroots) in personal capacity

15. 15 Questions? Ronald M. Jacobs Chair, Political Law Practice Venable LLP 202-344-8215 rmjacobs@venable.com