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Friday, 10 January 2020 10:00

Year-End Budget Deal Repeals ACA Taxes and Fees

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President Trump signed a budget deal on the 20th of December. Some highlights included expanded parental leave for federal workers, a newly-created Space Force, an increase in the smoking age, and border wall funding. The deal also contained a major repeal of health care taxes and fees.

The budget deal repealed several taxes created by the Affordable Care Act:

  • The dreaded Cadillac Tax would have heavily taxed employer plans that were considered too rich. This tax was previously delayed several times, and now with this recent legislation it will never take effect.

  • The Medical Device Tax is a 2.3% tax on U.S. medical device revenue that was in place from 2013-2015. It is now fully repealed and will not be implemented as scheduled in 2020.

  • The Health Insurance Tax (HIT) was also repealed, but not until 2021. The fee was first implemented in 2014, had been suspended in 2017 and 2019, but is in effect for 2020 before sunsetting in 2021. This tax applies only to fully insured health plans.

The budget deal also extended the Patient-Centered Outcomes Research Institute Fees (PCORI Fees) by ten years. For fully insured plans, this fee is paid by the carriers, but for self-funded plans including Health Reimbursement Arrangements, the employer is the one to file and pay the fees. The fee was due to end this year but will now remain until 2029. The fee, which is currently $2.45 per covered life, will be indexed with inflation and is due at the end of July each year. Also included in the extension are changes to research priorities.

To read more about these changes, please see these sources:

https://www.uhc.com/employer/news/brokers/recently-signed-budget-deal-removes-significant-aca-taxes

https://www.cigna.com/employers-brokers/insights/informed-on-reform/

If you have any questions about how these fees affect your health plan, please contact us today!

Read 396 times Last modified on Monday, 24 February 2020 12:17
Amy De Lorenzo

Amy Johnston is an Account Manager with extensive experience working with both large and small employers as a broker.  In addition to five years of broker experience prior to joining Fall River, she also brings eight years of insurance carrier expertise.  Amy is an expert on ERISA, the Affordable Care Act, and other compliance issues.

Ms. Johnston received a Bachelor of Arts degree in Communications from Colorado State University. She is a Colorado native from Steamboat Springs, and loves spending time in the mountains with her husband, two children, and Tucker the cocker spaniel. She enjoys snowshoeing, hiking, and philanthropy work to promote education.