On Friday, December 18th, Congress passed and the President signed a very significant Omnibus spending bill. This bill includes several tax relief measures related to the ACA:
- A two year delay (from 2018 to 2020) on the Excise Tax, commonly known as the Cadillac Tax
- A two year moratorium (2017-18) on the medical device tax that is currently in effect
- A one year moratorium (2017) on the ACA insurer tax which has been built into all fully insured premiums since 2014
Each of these changes is a temporary rather than permanent elimination of these taxes. The moratorium on the latter two taxes, since they are already in effect, may result in a slight easing of your 2017 renewal increase if you have a fully insured medical plan (self funded plans are not subject to the health insurer tax, which is by far the larger of the two). In the absence of new legislation to make the changes permanent, the restoring of the insurer tax two years later could then bump up the 2019 fully insured renewal increases, much as employers experienced in 2014 when this tax first went into effect.
The great debate that will continue is whether these bills increase the likelihood of eliminating the taxes altogether. While many employers are in favor of permanent elimination, the costs of even the temporary elimination could result in a significant addition to the national deficit, since there were no corresponding “pay for’s” in the legislation to replace the lost revenue. Permanent elimination could add quite a bit more to the deficit, which affects us all as taxpayers.
The spending bill also included some notable features unrelated to the Affordable Care Act, such as the extension of healthcare benefits for 9/11 first responders, the removal of the ban on U.S. exports of crude oil, and an extension of a business tax credit for research and solar/wind credits, as well as other popular tax deductions. Notably for employers with Section 132 pre-tax parking and transit benefits, the bill awarded equal status between transit and parking, allowing a monthly income exclusion of up to $250 for both transit passes/vanpools as well as parking.
If you have any questions about the impacts of this bill on your ACA planning or compliance, please This email address is being protected from spambots. You need JavaScript enabled to view it.
