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The Cadillac tax was initially set to take effect in 2018 but was delayed to 2022 and has now been repealed.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.

For further information or specific guidance for your company or client, contact ERISAfire by pinging us on the blue in-app messenger below. You may also contact me directly at andrea@erisafire.com.

ERISAfire LLC is an employee benefits compliance services firm, specializing in health and welfare benefits. ERISAfire has reimagined benefits compliance, leveraging a unique combination of custom-built technology to automate transactional tasks, ERISA geeks for complex analysis, and experienced ERISA attorneys to scrutinize even the most mundane compliance tasks. Learn more at www.erisafire.com.

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