Sheet metal & Air Conditioning Contractors’ National Association

Letters & Testimonies

SMACNA Urges Congress to Oppose Taxation of Health Care Benefits

May 01, 2017


In a recent letter to both the Senate and House, SMACNA voiced its strong opposition to the taxation of health care benefits in any form or at any level in addition to opposing taxing other employer provided fringe benefit programs negotiated through collective bargaining.  SMACNA strongly believes that it is time for Congress to act to stop irresponsible employers who do not provide coverage for their workers from shifting the cost of providing care for uninsured and underinsured workers to employers and employees who forgo wages and profit to secure health care benefits for individuals and families. 

Employers nationwide provide stable health care benefits to more than 177 million people – the largest source of health care coverage in the country.  Employers and employees value and rely on the health care benefits provided.   Eliminating or capping the employer exclusion would be a direct tax on the middle class.   Neither tax reform nor health care reform should undermine the one part of the health care system that works for both the employer and the employee, especially since such a move is not likely to drive down the cost of care. 

The Affordable Care Act provided an exemption for employers with fewer than 50 employees, which means almost all the construction industry employers would fall under the exemption.   Yet, for decades SMACNA employers have provided health care benefits regardless of number of employees.  We prove that small employers are fully capable of providing health care insurance for workers.  Our employers are committed to providing health care and reining in health care costs.  But increasing taxes on employees or employers will further drive up out of pocket expenses for employees and increase financial burdens.  Such a move, no doubt would disrupt care and lead fewer employers to offer health insurance, increasing the number of uninsured workers.  One of the primary reasons for higher premiums and soaring health care costs is uncompensated care.   Increasing the number of uninsured is no way to fix the health care system. 

Proposals to tax employee benefits as wages are patently unfair.  SMACNA and its collective bargaining counterparts have negotiated healthcare benefits in lieu of wages at the negotiating table to the mutual satisfaction of both parties. Taxing insurers that offer good individual and family coverage to pay for a tax or health overhaul, is also not equitable nor acceptable.  Such a proposal would likely reduce offered benefits negotiated at the bargaining table in the future and would affect all self-insured health and welfare trust plans, as well as large employers who also self-insure. 

Joint labor-management, multiemployer health and welfare plans have successfully provided health care coverage for millions of workers in the construction industry.  The industry has provided better, affordable care than many other industries and for years our employers and workers have been negatively affected by the trend in health care costs and the growing numbers of employers with uncovered construction workers. Each year a larger portion of the negotiated wage package goes to cover health care costs.  The cost of providing uncompensated health care to uninsured workers results in higher premiums for those providing care.  Compounding the problem, employers not providing benefits, quality wages and health coverage have a competitive advantage over the union contractor.  SMACNA members have long supported expanding healthcare coverage for the construction industry workforce and we support the goal of ensuring all workers and other citizens have comprehensive, affordable coverage. Those providing health care have subsidized healthcare provided to the uninsured and those businesses not providing care for far too long. 

The legislative goals of designing a comprehensive tax reform package or providing our citizens with comprehensive health insurance coverage are admirable and most all Americans support them. However, our association members and their employees understand that one can strongly support tax and healthcare reform without endorsing the taxation of the health care benefits of millions of workers covered by multiemployer health care plans. SMACNA is urging Congress to be an opponent of taxing employee health benefits and other benefits to “pay for” tax reform or healthcare reform proposals currently under consideration.  We also strongly believe that it is time for Congress to act to stop irresponsible employers who do not provide coverage for their workers from shifting the cost of providing care for uninsured and underinsured workers to employers and employees who forgo wages and profit to secure health care benefits for individuals and families.  

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5/01/17