A recent law signed by President Trump, the Further Consolidated Appropriations Act, is primarily a spending bill but includes significant changes that will impact all health plans as well as the Affordable Care Act (ACA). These changes are mainly targeted at employer-sponsored group health plans.
Repeal of ACA Taxes
The Act repeals a number of taxes included in the ACA on taxes and fees that were already temporarily suspended by Congress. The repeals starting with the Medical Excise Tax, a 2.3% excise tax on domestic sales of medical devices. This repeal went into effect for sales after December 31, 2019. While the tax was initially implemented in 2013, it has since been suspended twice by Congress and so has not been in effect since the end of 2015.
The Act also repealed the annual fee that was imposed on health insurance policies that were offered in the individual and small group markets. The fee also applied to Medicaid managed care plans, Medicare Part D plans, and Medicare Advantage plans. The annual fee on these plans had previously been suspended for 2017-2018.
Similarly, after several suspensions, the Act repealed the Cadillac tax that imposed an excise tax on high-cost employer group health plans. This excise tax applied to employer-sponsored plans that were larger than statutorily set thresholds.
Additional Changes to the Affordable Care Act
In addition to completely repealing, rather than continuing to suspend, a number of taxes and fees associated with the ACA, the new spending Act also extended the fees that insurers and self-funded employers had to pay to fund research for the Patient-Centered Outcomes Research Institute. The Institute was created by the ACA and mandated to research the effectiveness of various medical treatments, protocols, and strategies. The fee extension means insurers will have to pay the fee for a second ten-year period or until about 2030. Further, the fees will be adjusted for inflation.
The Act made a few changes to ACA reporting requirements including requiring HHS to disclose costs associated with implementing the ACA and a requirement that HHS provide detailed information for the budget on federal funds used in the ACA marketplace.
The spending Act has several other impactful provisions including keeping the medical expense deduction floor at 7.5% for individual medical expense deductions. The Act also extends a credit for employers to claim when qualifying employees take paid family and medical leave through 2020.
Paying attention to the details of legislative changes, the tax cuts, additions, fees, and reporting changes is important for the attorneys at Hall Benefits Law. We help our clients stay on top of the legislative and regulatory changes that apply to their businesses and ensure that their benefit plans and processes are updated to stay in compliance. To learn more, call our Georgia-based team today at 678-439-6236 or visit the Hall Benefits Law website.
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