The budget and tax package passed by Congress on Dec. 18, 2015 includes a two-year delay of the Affordable Care Act (ACA) excise tax on high-value health plans (aka, “the Cadillac Tax”). The President is expected to sign the bill into law.
The Cadillac Tax was slated to begin in 2018, but the new law pushes back the start date to 2020. The delay allows contractors and health fund trustees two more years to study and implement the best ways for their plans to postpone and avoid the tax as long as possible.
For additional information on the Cadillac Tax see the Trustee Advisor Blog, May 20, 2015.
Don’t forget! ACA reporting requirements begin early 2016
The new law does not affect the ACA reporting requirements due to begin in early 2016.
The new spending and tax package does include changes to other ACA-related provisions including:
A two-year suspension (2016 and 2017) of the 2.3 percent medical device tax (a tax that is often passed on to health-care purchasers through increased prices).
A one-year suspension (2017) of the tax on health insurers (a tax that is usually passed on to health-care purchasers, including health plan sponsors such as employers and multiemployer health funds).
Tax deductibility of the cost of the Cadillac Tax by organizations that must pay it. It is anticipated in the case of multiemployer plans, that health and welfare funds will reach out to their contributing employers to pay the tax. It is unclear, however, which organization would be eligible to deduct the tax as a business expense under this change.