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Tuesday, 30 January 2018 14:59

The Ever-Changing World of ACA Taxes

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There are several healthcare-related taxes that employers have been responsible for under the Affordable Care Act.  Some have gone through a sunset while others continue, and some were given a temporary holiday and were scheduled to start anew in 2018.

Following a short government shut-down, President Trump signed a short-term spending bill (a Continuing Resolution or “CR”) on January 22nd to reopen and fund the federal government through February 8, 2018.  Attached to the bill are suspensions of three ACA taxes and a six-year extension of the Children’s Health Insurance Program (CHIP). 


One tax already included in most 2018 rates is the Health Insurance Tax (HIT).  The HIT tax is a permanent annual fee on health insurers and was suspended for 2016 and 2017 by Congress, but was scheduled to come back for 2018.  Most insurance carriers have passed this cost along in the premiums for fully insured medical plans, resulting in a 2-3% increase  to group and individual rates.  The tax also applies to stand-alone dental and vision plans.  A summary of the tax’s impact by state can be found here.  While the Continuing Resolution has delayed this tax until 2019, most Colorado insurers have already included this tax impact in their 2018 rates. 


The Medical Device Excise Tax was previously suspended for 2016 and 2017, and although it was restarted on January 1 of this year, the Continuing Resolution ordered that it remained suspended through the end of 2019.  When it starts up again, this 2.3% excise tax is assessed to medical device manufacturers and importers, and will show up in the claims experience of self funded employers as well as have a trickle-down effect that increases fully insured premiums a bit.

Cadillac Tax

The last tax impacted by the Continuing Resolution is the long-feared High Cost Plan Tax or “Cadillac Tax,” which is a 40% excise tax on employer plans exceeding $10,200 in premiums annually for individuals and $27,500 for families.  The tax was scheduled to take effect in 2020, but the Continuing Resolution included another 2-year delay until 2022.  Due to this delay, the individual and family premium thresholds are expected to be updated prior to the new January 1, 2022 effective date.  Many employers, unions, and industry groups have highly opposed this tax, seeking to repeal it completely and citing concerns about the financial burdens for employers and their employees. 

In case the Cadillac tax is not further delayed, it is critical to for employers implement cost saving mechanisms now to avoid this significant excise tax. Contact us today for a complimentary consultation of how to prepare for the Cadillac tax and the impact of these other taxes.

Read 2344 times Last modified on Monday, 14 September 2020 16:10
Tonya Young

Tonya is our Senior Account Manager and brings eleven years of prior insurance company expertise to Fall River, having worked at Anthem Blue Cross and Great-West Healthcare (now part of CIGNA). Tonya holds a Bachelor of Science in Psychology from Texas A&M University. Originally from Minnesota, she loves the Colorado outdoors and enjoys family time with her young daughter.