ACA News & Publications

ACA Pathways: Cadillac Tax Delayed and Certain Other ACA Taxes Suspended

January 24, 2018

On January 22, 2018, the President signed a short-term spending bill into law to reopen and fund the federal government through February 8, 2018. Attached to the spending bill were delays or suspensions on three taxes under the Affordable Care Act (ACA)- the Cadillac Tax, the Health Insurance Provider Fee, and the tax on medical devices. In addition, the funding bill extended the Children's health Insurance Program (CHIP) for an additional six years. The following briefly describes the delays or suspension of these ACA taxes.

Cadillac Tax Delayed Until 2022

The tax on high cost health insurance, commonly referred to as the Cadillac Tax, is a 40 percent excise tax on the amount, if any, by which the cost of an employee's applicable employer sponsored health coverage exceeds specific limits. It was initially set to take effect this year but was delayed until 2020. As a result of this law, the Cadillac Tax has been delayed another two years until January 1, 2022. The thresholds, which originally were $10,200 for self-only coverage and $27,500 for family coverage, will also be updated.

Health Insurance Provider Fee Moratorium For 2019

In addition, the Health Insurance Provider Fee is suspended for the 2019 calendar year. The fee, which had previously been suspended for 2017, is a tax that affects fully insured plans only and represents a fee that is charged to each covered entity that is engaged in the business of providing health insurance. The fee is part of administrative costs for health insurance plans, and must be paid by September 30th annually. Because the fee will not be collected for the 2019 fee year, administrative costs for plans in all impacted markets will hopefully be adjusted appropriately to account for the moratorium. However, the fee continues to apply for the 2018 calendar year.

Medical Device Tax Suspension Continues Through 2019

Under the ACA, there is a 2.3 percent tax on medical device revenues. This tax had previously been suspended for 2016 and 2017. It is now set to remain suspended for an additional two years- through 2019.

For More Information
For more information about this ACA Pathways or about any other health care reform-related provisions, please contact your Burnham Benefits consultant or Burnham Benefits at:

Burnham Benefits

Burnham Benefits does not engage in the practice of law and this publication should not be construed as the providing of legal advice or a legal opinion of any kind. The consulting advice we provide is intended solely to assist in assessing its compliance with the Patient Protection and Affordable Care Act and other applicable federal and state law requirements, and is based on Burnham Benefit’s interpretation of federal guidance in effect as of the date of this publication. To the best of our knowledge, the information provided herein, and assumptions relied on, are reasonable and accurate as of the date of this publication. Furthermore, to ensure compliance with IRS Circular 230, any tax advice contained in this publication is not intended to be used, and cannot be used, for purposes of (i) avoiding penalties imposed under the United States Internal Revenue Code or (ii) promoting, marketing or recommending to another person any tax-related matter.

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