SECURE Act In; Three ACA Health Taxes Out!

Three taxes created to fund the Affordable Care Act (ACA) have been repealed, thanks to the Setting Every Community Up for Retirement Enhancement Act (the “SECURE Act”) of 2019.

ACA Excise Tax on High-Cost Employer Medical Plans

Set to take effect in 2022, the ACA excise tax on high-cost employer medical plans — also known as the “Cadillac Tax” — set a cap on tax deductions taxpayers could claim based on their health insurance benefits.  The tax would have inflicted a 40% excise tax on employer-sponsored health plans where annual premiums exceeded $11,200 for individuals or $30,150 for families.

Health Insurance Tax (HIT)

This annual fee on health insurance providers went into effect in 2015, was suspended from 2017 to 2019, went back into effect in 2020, and will be gone for good after December 31, 2020, thanks to the SECURE Act.  HIT  applied to individual policies, small groups, non self-insured employers, Medicaid managed care, Medicare Part D, and Medicare Advantage.  It was apportioned among insurers based on each company’s market share and value of premiums written. It is estimated that  HIT added 2.2% to the cost of health insurance premiums for consumers.

Medical Device Tax

This 2.3% excise tax on the domestic gross sales of medical devices by manufacturers, producers, and importers was implemented in 2013 but was suspended by Congress twice and has not been in effect since January 1, 2016.  It is repealed as of December 31, 2019.

PCORI Fee Extended by 10 Years

The SECURE Act extended funding for the Patient-Centered Outcomes Research Institute (PCORI) for another 10 years.  PCORI was established by the ACA to study the efficacy of various medical strategies, treatments, and procedures in treating, managing, diagnosing, or preventing illness or injury.

PCORI research is funded by an annual fee paid by sponsors of group health plans. Employers with self-insured plans pay the fees themselves, while the insurers pay the fee for fully insured plans. The fee is adjusted annually by the IRS based on the number of people covered under a policy.  The PCORI fee for plans ending between January 1 and September 30, 2019 is $2.45 per person covered, and the fee is due July 31, 2020.

We help our clients stay on top of the legislative and regulatory changes that apply to their businesses, and we ensure that their benefit plans and processes are updated to stay in compliance. To learn more, call Hall Benefits Law today at 678-439-6236.

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Hall Benefits Law, LLC

HBL offers employers comprehensive legal guidance on benefits in mergers and acquisitions, Employee Stock Ownership Plans (ESOPs), executive compensation, health and welfare benefits, healthcare reform, and retirement plans. We counsel a wide spectrum of clients including small, mid-sized, and large companies, 401(k) investment advisors, health insurance brokers, accountants, attorneys, and HR consultants, just to name a few. HBL is passionate about advising clients, and we are dedicated to our mission: to provide comprehensive, personalized, and practical ERISA and benefits legal solutions that exceed client expectations.

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