On Monday morning, President Obama signed legislation that will delay the Affordable Care Act’s (ACA) Cadillac tax for two more years. Pending any further delays or a complete repeal, the excise tax is now scheduled to take effect beginning in January 2020.
Along with the delay, the language in the bill makes the Cadillac tax deductible to employers. It also includes a one-year delay of the health insurance tax (HIT), which will lower premiums, and suspends a 2.3% tax on medical devices that began in January 2013 until December 31, 2017.
The provision was included in a $1.8 trillion omnibus spending package that was passed by the House of Representatives (316-113 vote) and the Senate (65-33 vote) late last week.
Originally scheduled to go into effect in 2018, the Cadillac tax is a proposed 40% excise tax that will impact high-cost employer health plans that exceed an established annual cost of $10,200 for individual coverage and $27,500 for family coverage. Mercer, a benefits consulting firm, estimated that a third of employers will be subjected to the tax by 2018, and that 60% of employers will be impacted by 2022.
The National Association of Health Underwriters (NAHU) supports the delay of the Cadillac tax, but remains committed to the eventual repeal of the tax due to its projected widespread impact on employer-provided insurance coverage.
*This article is written for informational purposes only and should not be construed as providing legal advice.