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On December 19, 2019, Congress passed the 2020 Further Consolidated Appropriations Act (“Act”), which makes the following Affordable Care Act (ACA) changes:

  • The Cadillac Tax was repealed and will never go into effect.
  • The HIT Tax was repealed, effective January 1, 2021. The HIT Tax will still be in effect for the 2020 plan year.
  • The PCORI fee was extended for another 10 years.

Cadillac Tax

The Cadillac Tax, a tax on high-cost health care plans, was originally passed as a provision of the ACA to finance health care expansion and control the cost of health care. The tax was originally set to take effect in 2018 but was delayed twice until 2022. The Act permanently repeals the Cadillac Tax, so the tax will never take effect.

For more on the Cadillac Tax, see our article.

Health Insurance Tax (HIT)

The HIT tax imposes an annual fee on health insurance issuers, health maintenance organizations, and non-fully insured MEWAs. Although the HIT is levied on insurers, the tax is passed through to employers and employees in the form of increased health insurance costs. The Act permanently repeals the HIT tax as of January 1, 2021. The HIT will still be in effect for the 2020 plan year.

For more on the HIT, see our article.

PCORI Fee

The Patient-Centered Outcomes Research Institute (PCORI) Fee, which was established as a part of the ACA to fund medical research, was set to expire in 2020. Insurers and employers with self-insured plans (including level funded plans and HRAs) are subject to the PCORI fee.  The last fee payment was expected to occur on July 31, 2019 (July 31, 2020 for non-calendar year plans). The Act extends the PCORI fee for another 10 years (meaning employers with self-insured plans must continue paying the fee).

For more on the PCORI Fee, see our article.

 

The information and materials on this blog are provided for informational purposes only and are not intended to constitute legal or tax advice. Information provided in this blog may not reflect the most current legal developments and may vary by jurisdiction. The content on this blog is for general informational purposes only and does not apply to any particular facts or circumstances. The use of this blog does not in any way establish an attorney-client relationship, nor should any such relationship be implied, and the contents do not constitute legal or tax advice. If you require legal or tax advice, please consult with a licensed attorney or tax professional in your jurisdiction. The contributing authors expressly disclaim all liability to any persons or entities with respect to any action or inaction based on the contents of this blog.

Emerald Law – Emerald is a Client Compliance Consultant for Sequoia, where she works with our clients to optimize and streamline benefits compliance. In her free time, Emerald enjoys stand-up comedy, live music and writing non-fiction.