President Trump signed into law a short-term spending bill to reopen and fund the federal government through Feb 8, 2019. Attached to the bill are delays or suspensions of three taxes under the ACA and a six-year extension of the Children’s Health Insurance Program (“CHIP”).

The “Cadillac Tax,” the Affordable Care Act’s 40% excise tax on high-cost employer sponsored health coverage, is delayed two additional years, with a new effective date of January 1, 2022. The Health Insurance Industry Fee is suspended for one year (2019) and the Medical Device Tax is suspended for two years (2018 – 2019).

Cadillac Tax
The Cadillac Tax imposes a 40% excise tax on coverage in excess of certain annual premium thresholds. When enacted with a 2018 effective date, the thresholds were $10,200 for self only coverage and $27,500 for family coverage. The thresholds will be updated prior to the new January 1, 2022 effective date.

Health Insurance Industry Fee (a.k.a. Health Insurer Tax “HIT”)
The short-term spending bill also suspends the Health Insurance Industry Fee for 2019. This fee was effective in 2014 and only affects insured health plans. It was previously suspended for 2017, but was back in effect for 2018.

Medical Device Tax
Suspended for 2016 and 2017, the 2.3% excise tax of U.S. Medical device revenues restarted on January 1, 2018, but will now remain suspended until the end of 2019.

If you have any questions, please contact your assigned Sentinel Client Executive.