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H.R. 173House115th Congress (2017-2019)In Committee

Middle Class Health Benefits Tax Repeal Act of 2017

Sponsored by Mike KellyRep. Mike Kelly (R-PA)
Introduced January 3, 2017

AI-Generated Summary

Updated April 15, 2026 at 10:59 AM UTC

The Middle Class Health Benefits Tax Repeal Act of 2017 would remove the federal excise tax on high‑cost employer‑provided health plans, often called the “Cadillac tax.” It amends the Internal Revenue Code so that employers and employees are no longer subject to that tax, and updates related definitions and references. The change applies to tax years beginning after December 31, 2017, affecting any group health plan that qualifies as employer‑sponsored coverage.

Key Provisions

  • Repeals the excise tax by striking Section 4980I of the Internal Revenue Code.
  • Amends Section 6051 to replace references to the repealed tax and adds a new definition of “applicable employer‑sponsored coverage,” including exceptions for certain dental, vision, and long‑term care plans.
  • Updates the table of sections for Chapter 43 to remove the entry for Section 4980I.
  • Sets the effective date for the changes to taxable years beginning after December 31, 2017.

Legislative Activity

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2 earlier actions
HouseCommittee Latest Action

Referred to the Subcommittee on Health.

Health Subcommittee

January 13, 2017

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HouseIntro Referral

Introduced in House

January 3, 2017

HouseIntro Referral

Referred to the House Committee on Ways and Means.

Ways and Means Committee

January 3, 2017

HouseCommittee

Referred to the Subcommittee on Health.

Health Subcommittee

January 13, 2017

Bill Text

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Introduced in HouseIssued January 3, 2017

I

115th CONGRESS

1st Session

H. R. 173

IN THE HOUSE OF REPRESENTATIVES

January 3, 2017

Mr. Kelly of Pennsylvania (for himself and Mr. Courtney) introduced the following bill; which was referred to the Committee on Ways and Means

A BILL

To amend the Internal Revenue Code of 1986 to repeal the excise tax on high cost employer-sponsored health coverage.

1.

Short title

This Act may be cited as the Middle Class Health Benefits Tax Repeal Act of 2017.

2.

Repeal of excise tax on high cost employer-sponsored health coverage

(a)

In general

Chapter 43 of the Internal Revenue Code of 1986 is amended by striking section 4980I.

(b)

Conforming amendment

Section 6051 of such Code is amended—

(1)

in paragraph (14) of subsection (a), by striking section 4980I(d)(1) and inserting subsection (g), and

(2)

by adding at the end the following:

(g)

Applicable Employer-Sponsored Coverage

For purposes of subsection (a)(14)—

(1)

In general

The term applicable employer-sponsored coverage means, with respect to any employee, coverage under any group health plan made available to the employee by an employer which is excludable from the employee’s gross income under section 106, or would be so excludable if it were employer-provided coverage (within the meaning of such section 106).

(2)

Exceptions

The term applicable employer-sponsored coverage shall not include—

(A)

any coverage (whether through insurance or otherwise) described in section 9832(c)(1) (other than subparagraph (G) thereof) or for long-term care,

(B)

any coverage under a separate policy, certificate, or contract of insurance which provides benefits substantially all of which are for treatment of the mouth (including any organ or structure within the mouth) or for treatment of the eye, or

(C)

any coverage described in section 9832(c)(3) the payment for which is not excludable from gross income and for which a deduction under section 162(l) is not allowable.

(3)

Coverage includes employee paid portion

Coverage shall be treated as applicable employer-sponsored coverage without regard to whether the employer or employee pays for the coverage.

(4)

Governmental plans included

Applicable employer-sponsored coverage shall include coverage under any group health plan established and maintained primarily for its civilian employees by the Government of the United States, by the government of any State or political subdivision thereof, or by any agency or instrumentality of any such government.

(5)

Cost of coverage

(A)

Health FSAs

In the case of applicable employer-sponsored coverage consisting of coverage under a flexible spending arrangement (as defined in section 106(c)(2)), the cost of the coverage shall be equal to the amount determined under rules similar to the rules of section 4980B(f)(4) with respect to any reimbursement under the arrangement reduced by the contributions described in subsection (a)(14)(B).

(B)

Archer MSAs and HSAs

In the case of applicable employer-sponsored coverage consisting of coverage under an arrangement under which the employer makes contributions described in subsection (b) or (d) of section 106, the cost of the coverage shall be equal to the amount of employer contributions under the arrangement.

(C)

Allocation on a monthly basis

If cost is determined on other than a monthly basis, the cost shall be allocated to months in a taxable period on such basis as the Secretary may prescribe.

.

(c)

Clerical amendment

The table of sections for chapter 43 of such Code is amended by striking the item relating to section 4980I.

(d)

Effective date

The amendments made by this section shall apply to taxable years beginning after December 31, 2017.