This week Congress passed a bipartisan appropriations package that will keep the federal government running through the next year. Folded into the sweeping legislation is a full, and permanent, repeal of the Affordable Care Act’s (ACA) Cadillac Tax. The nearly $1.4 trillion, two-part spending deal was signed by President Donald Trump just before the midnight Friday deadline.
Delayed repeatedly by Congress, the Cadillac Tax would have slapped a 40% levy on the value of employer-provided health benefits that exceed $11,200 for individual coverage and $30,100 for family policies. The idea was to reduce soaring health-care costs by discouraging employers from offering such generous plans.
Repeal of the tax – which had been postponed until 2022 – is projected to cost the federal government nearly $200 billion over 10 years, according to the Congressional Budget Office (CBO).
This positive development is welcome news, and caps off years of efforts by a broad range of stakeholders…including TASC, ECFC and the American Benefits Council.
Other policy changes incorporated into the year-end Continuing Resolution:
- The ACA’s medical device tax and so-called HIT tax on health insurance premiums were also repealed.
- Reauthorized funding for the Patient-Centered Outcomes Research Institute (PCORI) for another 10 years, thus requiring self-insured group health plans and health insurers to continue to pay fees to fund this institute until 2029. Under the ACA, these fees were originally set to sunset as of September 30, 2019.
- Relief from a tax reform provision that applied to tax exempt entities. Per the Tax Cuts and Jobs Act of 2017, tax-exempt entities were required to pay an unrelated business income tax (UBIT) on any qualified transportation fringe benefit provided to employees for which employers are not permitted to take a deduction.