On December 20, 2019, the President signed the federal spending bill H.R. 1865, known as the Further Consolidated Appropriations Act, 2020. This repeals several Affordable Care Act (ACA) taxes— the Health Insurance Tax (HIT), the Cadillac Tax and the Medical Device Tax. It also extends the Patient-Centered Outcomes Research Institute (PCORI) fee for a decade.
Health Insurance Tax Repeal
As of 2021, the Further Consolidated Appropriations Act, 2020, repeals the HIT. Due to a pass-through in premium costs, estimates were that the HIT would increase fully insured health plan premiums between 1.5% and 3%. This gap in funding is now to be determined.
Cadillac Tax Repeal
The Cadillac tax was initially set to take effect in 2018 but was delayed to 2022 and has now been repealed. Under the Cadillac tax, employers sponsoring health plans with an annual cost above the permitted amount were to pay a 40% excise tax on the excess plan costs.
Medical Device Tax Repeal
Following the passage of the ACA and continuous delays, the Further Consolidated Appropriations Act, 2020, repeals the medical device tax. If enacted as initially intended, costs for all plans reimbursing medical device claims would have significantly increased.
Extension of the PCORI Fee
The Further Consolidated Appropriations Act, 2020, extends the PCORI fee until 2029; therefore, employers and carriers will be required to pay the fee for another 10 years. The fee was initially scheduled to expire as of plan years ending after Sept. 30, 2019.
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