Excise Tax
Implementation of the 40 percent excise tax is delayed from 2018 to 2020. While the tax was originally non-tax deductible, the Omnibus changes that treatment and makes the tax deductible.
The 40 percent excise tax applies to the cost of employer health plan coverage exceeding certain threshold amounts, which were originally set for 2018 at $10,200 for individuals or $27,500 for families. These thresholds are indexed and will be higher on the delayed effective date in 2020. The Omnibus also calls for a study on how to determine adjustments to these thresholds to reflect age and gender differences between businesses.
Many employers, unions, insurers and industry groups have opposed the tax based on concerns around administrative and financial burdens for employers and adverse outcomes for employees.
The delay allows the government additional time to propose regulations. It also provides opportunity for stakeholders to provide comments, as well as prepare their long-term health benefits strategies.
Health Insurance Industry Fee (a.k.a. Health Insurer Tax)
The Omnibus also suspends the Health Insurance Industry Fee for 2017. This fee began in 2014 and only impacts insured health plans.
Medical Device Excise Tax Moratorium
The 2.3% medical device excise tax that manufacturers and importers pay on sales of certain medical devices has generally been effective since January 1, 2013. As a result of the new law, this tax will not apply to sales during calendar years 2016 and 2017.
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