← Back to Bills
S. 40Senate115th Congress (2017-2019)In Committee

Middle Class Health Benefits Tax Repeal Act of 2017

Sponsored by Dean HellerSen. Dean Heller (R-NV)
Introduced January 5, 2017

AI-Generated Summary

Updated April 15, 2026 at 11:14 AM UTC

The Middle Class Health Benefits Tax Repeal Act of 2017 would eliminate the federal excise tax that was imposed on high‑cost employer‑provided health plans, often called the “Cadillac tax.” By removing this tax, the bill would lower payroll costs for employers offering expensive health coverage and affect employees who receive such plans. The change would take effect for tax years beginning after December 31, 2017.

Key Provisions

  • Deletes section 4980I of the Internal Revenue Code, which created the excise tax on high‑cost employer‑sponsored health coverage.
  • Amends section 6051 to replace references to the repealed tax and adds a new definition of “applicable employer‑sponsored coverage,” including what counts as coverage, exceptions (e.g., certain dental, vision, and long‑term care plans), and how the cost of coverage is calculated.
  • Updates the table of sections to remove the entry for the repealed tax.
  • Sets the effective date for all changes to taxable years beginning after December 31, 2017.

Legislative Activity

Stay on top of the latest movement without scrolling through every action

1 earlier action
SenateIntro Referral Latest Action

Read twice and referred to the Committee on Finance.

Finance Committee

January 5, 2017

View full timeline
SenateIntro Referral

Introduced in Senate

January 5, 2017

SenateIntro Referral

Read twice and referred to the Committee on Finance.

Finance Committee

January 5, 2017

Bill Text

Latest available legislative text

Reading Mode
Latest
Raw Text PDF XML
Introduced in SenateIssued January 5, 2017

II

115th CONGRESS

1st Session

S. 40

IN THE SENATE OF THE UNITED STATES

January 5, 2017

Mr. Heller introduced the following bill; which was read twice and referred to the Committee on Finance

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, or

(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.