Home Blog Business & News Cadillac Tax, HIT Tax, Medical Device Tax and CHIP extension
Cadillac Tax, HIT Tax, Medical Device Tax and CHIP extension
By Shayne Bevilacqua, MBA | 01-25-2018

President Trump has signed the Extension of Continuing Appropriations Act, which will fund the government through February 8, 2018. The Act includes:

– delays implementation of the Excise (Cadillac) Tax, ACAs tax on higher cost employer-sponsored health coverage, until 2022.
Previously, this tax, designed to discourage employers from compensating workers through more generous health insurance plans imposes a 40% tax on plans that cost more than $10,200 (for self-only coverage) and $27,500 (for family coverage)—was set to become effective in 2020.

-a one year suspension of the HIT tax on health insurers which was suspended for 2017, is in effect for 2018 but suspended with this Act for 2019. It was too late to suspend for 2018 as carriers have already filed rates. The ACA requires entities that provide health insurance to pay an annual non-deductible tax/fee to the IRS according to market share based on premiums written. The fee only applies to fully insured plans and was intended to recapture some of the benefits that insurers receive as more Americans purchase health insurance

-a two year suspension of the medical device 2.3% tax (for 2018 and 2019). This tax was previously suspended for 2016 ad 2017.

-a six year re-authorization of CHIP, the children’s Health Insurance Program, which provides health coverage to eligible children (and in some states to pregnant women) through Medicaid and separate CHIP programs.

The Joint Committee on Taxation reports that the Cadillac tax delay will result in $14.8 billion lost revenue, the HIT tax, a $12.7 billion loss in revenue and the medical device tax, a lost revenue of $3.8 billion.