Budget Bill Suspends/Delays Certain ACA Taxes

Congress suspended or delayed the imposition of three taxes added by the Affordable Care Act (ACA) as part of the short-term budget extension passed on January 22, 2018. See, H.R. 195. The taxes suspended or delayed are:

  1. Health Insurer's Provider Tax Removed for 2019: The annual fee on health insurance providers under Section 9010(j) of the ACA (previously applied for 2014 to 2016, suspended for 2017, and applied to 2018) has been suspended for 2019. The IRS has released questions and answers regarding the suspension, which are found at this link. Under the suspension, no fee will apply in 2019, but the 2018 fee still applies. Absent additional congressional action, the health insurer's provider fee will apply for 2020.

Cheiron Observation: Insurers are expected to reduce their otherwise applicable 2019 premiums to reflect the suspension. The impact varies by insurer and type of coverage. For some insurers this will be less than 1% of premiums, but for others the impact can exceed 3% of premiums. The fee does not apply to self-insured plans.

  1. Medical Device Tax Suspended until 2020: The 2.3% medical device excise tax imposed under Code Section 4191(c), previously applied for 2013 to 2015, suspended for 2016 and 2017, is suspended for two additional years to apply after December 31, 2019. This is the tax that manufacturers and importers would have to pay on their sales of certain medical devices.
  2. Excise Tax Delayed until 2022: The "Cadillac Tax," previously delayed until 2020, is delayed for two additional years to apply after December 31, 2021. Generally, the "Cadillac Tax" is a 40% excise tax under Code Section 4980I imposed on the portion of employer-sponsored health coverage cost that exceeds a statutory dollar limit.

Cheiron is an actuarial consulting firm that provides actuarial and consulting advice. However, we are neither attorneys nor accountants. Accordingly, we do not provide legal services or tax advice.