Last week’s dra­ma that shut down the fed­er­al gov­ern­ment, then un-shut it three days lat­er, was set­tled when agree­ment was reached on a Con­tin­u­ing Resolution. Includ­ed in the res­o­lu­tion are three tax breaks of par­tic­u­lar inter­est to employ­ers that offer group health cov­er­age to their workers.

Cadillac Tax: Delayed until 2022

The Afford­able Care Act (ACA) impos­es a 40 per­cent excise tax on the val­ue of employ­er-pro­vid­ed health cov­er­age exceed­ing cer­tain thresh­olds. This so-called Cadil­lac tax was sched­uled to take effect in 2020 but now is delayed until 2022.

Efforts to repeal the Cadil­lac tax are expect­ed to con­tin­ue. It orig­i­nal­ly had been sched­uled to take effect in 2018, then was delayed to 2020. This addi­tion­al two-year delay, to 2022, pro­vides fur­ther relief to employ­ers while giv­ing Con­gress time to con­sid­er per­ma­nent action.

Health Insurance Providers (HIP) Fee: Suspended for 2019

Start­ing in 2014, the ACA has imposed an annu­al fee on cer­tain health insur­ers that gen­er­al­ly is passed on to their pol­i­cy­hold­ers. It affects insured plans, includ­ing med­ical, den­tal, and vision insur­ance, but does not apply to self-fund­ed plans. Most advi­sors esti­mate the cur­rent fee impacts health insur­ance costs by 3 to 4 percent.

The HIP fee was sus­pend­ed for 2017, then resumed for 2018. Last week’s res­o­lu­tion will pro­vide anoth­er one-year mora­to­ri­um: the fee is sus­pend­ed for 2019.

Medical Device Tax: Suspended for 2018 and 2019

The ACA added a 2.3 per­cent excise tax on the sale of med­ical device prod­ucts, start­ing in 2013. It was sus­pend­ed for 2016 and 2017, then sched­uled to resume for 2018. Ana­lysts cite the tax as one fac­tor in increased health care expens­es that are passed on to health insur­ers and employers.

The new res­o­lu­tion sus­pends the med­ical device tax retroac­tive­ly for 2018 and 2019.

ThinkHR con­tin­u­al­ly mon­i­tors leg­isla­tive and reg­u­la­to­ry changes that affect employ­ers and their ben­e­fit offerings.

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