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Congress Passes Spending Package

On Thursday, December 19, 2019, the Senate passed a spending package which included a repeal of the Cadillac tax and the health insurance tax (HIT). 

The President is expected to sign the spending bill on Friday, December 20. The repeal is scheduled to be effective on January 1, 2021. 

The Cadillac tax, which called for a 40% excise tax on employer plans exceeding $10,200 in premiums per year for individuals and $27,500 for families, had been delayed multiple times since the Affordable Care Act (ACA) was enacted. With anywhere from 150 – 180 million people covered by employer-based plans, the unintended consequences of the Cadillac tax was a cause for concern for many employers who were looking to provide good coverage for their employees. 

The HIT imposed a new tax on health insurance that started at $8 billion in 2014, increased to $14.3 billion by 2018, and would have continued to increase each year. Estimates are that it added an additional $500 premium per family each year. While this was a tax on insurance providers, the cost has trickled down to the consumer. Although the HIT had sporadic delays and repeals over the past 5 years, it WILL BE in effect for 2020. 

The medical device tax was also permanently repealed as part of the package. This was a 2.3% excise tax on a range of medical devices and products. 

While the passage of yesterday’s spending bill repealed a number of ACA taxes, it revived another. The annual fee to fund the federal Patient-Centered Outcomes Research Institute (PCORI) had been set to expire on September 30. The bill extends the inflation-adjusted PCORI fee on health insurance policies and self-insured health plans for another 10 years. 

 Cosmo Insurance Agency is an independent insurance agency serving surrounding communities in New Jersey. Cosmo keeps its promise to assure an efficient and creative approach to the services we offer. Each of our clients experience a personalized and long-term relationship with us. Our New Jersey based team of health brokers guides our clients in helping them choose the most cost-effective options. By incorporating the latest in technology-based tools and laws on healthcare, employee benefits, life insurance and finance, we keep our clients up-to-date with the plans that encompass all of their needs, whether it is individual or group insurance.




Source: BenefitMall