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On Dec. 20, 2019, President Trump signed into law a spending bill (H.R. 1865) that repeals the following three taxes and fees under the Affordable Care Act (ACA):
- The Cadillac tax on high-cost group health coverage, beginning in 2020;
- The medical device excise tax, beginning in 2020; and
- The Health Insurance Tax, beginning in 2021.
In addition, the bill reinstates Patient-Centered Outcomes Research Institute (PCORI) fees for the 2020-2029 fiscal years (under the ACA, PCORI fees were scheduled to apply to policy or plan years ending on or after Oct. 1, 2012, and before Oct. 1, 2019). As a result, specified health insurance policies and applicable self-insured plans must continue to pay PCORI fees through 2029.
Additional details on the repealed taxes are included below. Click here to read the text of the bill.
Cadillac Tax
The Cadillac Tax would have imposed a 40% excise tax on coverage in excess of certain annual thresholds. When originally enacted in the ACA, the thresholds were $10,200 for self-only and $27,500 for family coverage with a 2018 effective date. The Cadillac Tax was delayed multiple times since passage of the ACA, and is now fully repealed, meaning it no longer exists and will never take effect.
Medical Device Tax
The Medical Device Tax imposed a 2.3% excise tax on U.S. medical device revenues. The tax was in effect over 2013-2015, and was suspended from 2016-2019. H.R. 1865 fully repeals the tax, effective Dec. 31, 2019.
Health Insurance Tax
H.R. 1865 also fully repeals the Health Insurance Tax, beginning in 2021. The fee, which was implemented in 2014, only applied to insured business, including insured Medicare plans, based on each insurer’s share of the taxable health insurance premium base. Due to the adverse impact on health insurance premiums, the fee was suspended in 2017 and 2019. It is important to note that the fee will be in effect for 2020 as no suspension was granted for that year; then, it will be repealed effective 2021.
As always, please do not hesitate to reach out to our Group Benefits team with any questions, comments or concerns.
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