Kilpatrick

Industry News

Signed Budget Deal Repeals ACA Taxes and Extends PCORI Fee

President Trump signed a budget spending deal that includes many items related to health care.

It repeals three significant taxes included in the Affordable Care Act, which were critical in enabling the CBO to score the Affordable Care Act as deficit neutral to enable its passage.

  • Cadillac Tax: Full and permanent repeal of the 40% ‘Cadillac Tax’ on high-cost employer-provided health coverage. The excise tax was originally scheduled to take effect in 2018 and was delayed until 2022. The CBO projected the tax would generate $168 billion in revenue from 2022 to 2028. The revenue was not replaced directly with this repeal.
  • Health Insurance Tax: Permanent repeal of the annual tax on fully insured health plan premiums beginning in 2021. The tax will raise $15.5 billion in 2020 alone. It was suspended in 2017 and 2019. The fee will be in effect for 2020.
  • Medical Device Tax: Repeal of the 2.3% excise tax on the sale of medical devices beginning Jan 1, 2020. The tax was in effect from 2013-2015 and suspended from 2016-2019. The tax was estimated to generate $30.6 billion in revenue from 2016 to 2025.

The spending bill extends the PCORI fee to the year 2029. The PCORI fee expired for plan years ending after Sep 30, 2019. The provision reinstitutes the fee, appropriates funds for the PCORI program, and makes changes to the research priorities. The tax for the most recent period was $2.45 per covered member and is adjusted for inflation. Read our PCORI Fee Update article for ongoing updates to the fee.

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