Delays Pending to the Affordable Care Act’s Cadillac Tax
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With the passing of a federal budget bill on December 18, 2015, employers have gained two more years of breathing room between now and the Affordable Care Act’s Excise tax penalty. Better known as the “Cadillac Tax” the Excise Tax portion of the ACA targeted rich employer plans, imposing a 40% tax on premiums exceeding the monthly limit.
Based on the CBO’s March 2015 baseline report, that means foregoing $9 billion in projected revenue during 2018 and 2019, when the plan was originally set to go into effect. The recent bill would delay the Cadillac tax until 2020.
Further provisions impacted by the bill include:
- Imposing a one-year moratorium on the collection of the ACA’s Health Insurance Providers Fee for 2017. While employers are not directly responsible for this fee, there are instances of insurance companies passing the cost of this tax onto employers. The relief from this tax in 2017 could have a positive trickle-down effect on annual rate increases in favor of employer’s providing coverage.
- A two-year moratorium on the Medical Device Tax. Generally, manufacturers or importers are the responsible parties for paying this 2.3% tax on certain medical devices.
The three portions of the ACA impacted by this bill are not expected to impact any Employer Shared Responsibility provisions for 1095/1094-C reporting.
Related Blog: Everything You Need to Know About 1095-C Reporting
There is some speculation that the delay of the Cadillac tax would lay the groundwork for an eventual appeal, but President Obama still gives no indication of repealing any legislation from the ACA.
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