BORISLOW INSURANCE
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Tax Delays Impacting ACA Provisions
Borislow Insurance is pleased to announce that on Friday, December 18, President Obama has signed omnibus legislation that includes the Consolidated Appropriations Act for 2016 and a tax extenders package. The agreement will keep the federal government running through September 2016. Within the legislation is language that significantly impacts provisions of the Patient Protection and Affordable Care Act (ACA), largely through delays of upcoming taxes.

Cadillac Tax

The "Cadillac" tax that was created by the Patient Protection and Affordable Care Act (ACA) has been delayed by two years. Now, instead of taking effect on January 1, 2018, the tax is scheduled to take effect on January 1, 2020.  This tax will be a 40 percent excise tax on group health insurance benefits that exceed annual cap amounts, and its provisions will apply to group health plans of all sizes and structures. Even for group health plans that do not meet these cap amounts in any given year, the way the tax is currently structured could lead to significant administrative burdens for employers through new plan valuation and notification requirements.  In addition to delaying the tax, the new legislation will make the tax permanently deductible to employers and calls for a study to be done within the next 18 months on the appropriateness of how the current law dictates that the tax caps may be adjusted annually for employers to account for employee age and gender.

Health Insurance Tax

The omnibus spending bill also imposes a one-year suspension during 2017 on the national Health Insurance Tax (HIT) premium tax created by the ACA that has been imposed on a fully-insured group and individual health insurance plans since 2014.  While health insurers pay this tax on behalf of their insured, the cost of the tax is directly passed down to businesses and individuals who buy full-insured coverage through higher premiums.  It has been estimated that the HIT has been driving up costs of health care plans purchased in the fully-insured marketplace by as much as $500 per family annually. This one-year suspension is intended to provide temporary relief for up to 12 months to the businesses and individuals who purchase fully-insured health insurance coverage.  Given the newness of the legislation, it remains to be seen how health insurance issuers may adjust premiums in 2017 to account for the tax suspension.  However, your team at BI will be monitoring this issue closely and will pass along information about how our clients may benefit as it becomes available from the IRS and the health plans directly.

Medical Device Tax

Finally, the bill also puts a two-year moratorium on the ACA's 2.3 percent tax on revenue from medical device sales which will run through January 31, 2017.  This tax has also been contributing to the rising cost of health insurance premiums for all American consumers because it makes medical devices more expensive.

Your team at BI has been fighting for business relief from these three taxes in Washington since the ACA was enacted in 2010.  Members of our leadership team are involved at the highest levels with our national professional organizations so that we can provide real-world insight to policymakers about how higher health insurance costs and increasing administrative burdens are adversely affecting our clients and their employees.  We go to Washington, DC multiple times a year to directly meet with lawmakers on these issues and other concerns affecting you, our clients.  We are very proud of the changes we were able to affect this past week, even if the relief is only temporary and we plan to continue to fight for the permanent repeal of these taxes on businesses and employees. 

If you would like more information about the delay and temporary suspension of these taxes or BI's work on public policy issues affecting employers and health insurance consumer, please contact us at compliance@borislow.com. 
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