Government Funding Bill Suspends Three ACA Tax Provisions
In addition to ending the government shutdown and funding the government through February 8, H.R. 195 (the “Act”), signed by President Trump on January 22, further suspended or delayed several tax provisions introduced by the Affordable Care Act (“ACA”).
1. ACA Tax Provisions – Health Insurance Provider Fee
The Health Insurance Provider Fee (“Fee”) is a flat fee placed on covered entities that write insurance premiums for United States health risks. The Fee is allocated to certain health insurance providers based on their share of premiums written in the United States on an annual basis. Originally effective for tax years beginning after December 31, 2013, the fee was suspended for the 2017 calendar year as part of the Consolidated Appropriations Act of 2016.
The Act further suspended collection of the Fee for the 2019 calendar year; it does not affect the filing requirement and payment of the fee for 2018. The amount of the Fee for the 2018 year is $14.3 billion and would have been increased by the rate of premium growth for 2019.
2. ACA Tax Provisions – Cadillac Tax
In addition, the Cadillac tax, which is a 40% excise tax placed on health insurers on so-called “rich” employer-sponsored health insurance coverage plans, was further delayed by the Act. The Cadillac tax was originally set to take affect for tax years beginning after December 31, 2017, however, the Cadillac tax was delayed to tax years beginning after December 31, 2019. Now, with the passage of the Act, the Cadillac tax has been further delayed for an additional two years and is scheduled to apply for tax years beginning after December 31, 2021.
3. ACA Tax Provisions – Medical Device Excise Tax
The Act also further suspended the medical device excise tax provision of the ACA. Please click here to access our alert which explains this suspension in greater detail.
If you have questions about any of the ACA tax provisions, please contact your Withum tax advisor or fill out the form below and we’ll reach out to you shortly.
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