President Trump signed a short-term spending bill into law on January 22, 2018 after its passage in the House and Senate. While the primary purpose of the bill was to end the Federal government shutdown and fund government operations through February 8, 2018, the bill also included several provisions related to broader health policy:
A. The Children’s Health Insurance Program (CHIP) is extended for six years. Federal funding had previously ceased on September 30, 2017.
B. Three health taxes created under the Affordable Care Act are temporarily suspended or delayed:
1. Excise Tax on High-Cost Health Coverage:
The effective date of the 40% excise tax on health coverage exceeding certain thresholds (commonly referred to as the Cadillac Tax) is postponed from January 1, 2020 to January 1, 2022. The multiemployer threshold for computing the excise tax was set at $27,500 per year based on a January 1, 2018 effective date and is expected to be adjusted for inflation.
Both fully insured and self-funded health funds, including retiree only funds, are subject to this excise tax. Projected retiree medical liabilities that included this tax for 2020 and 2021 will now be lower, as the tax amounts for these years will now be removed from the liability calculation.
2. Health Insurer Fee for Fully Insured Plans:
This bill suspends the insurer tax for calendar year 2019. The insurer fee, which began in 2014, was temporarily suspended in 2017 before being re-implemented for 2018. As a result, fully insured funds with 2019 renewals should see lower premium levels than they would otherwise have seen.
3. Medical Device Tax:
The 2.3% medical device excise tax began on January 1, 2013 and is imposed on manufacturers and importers of certain medical devices. The tax was suspended for 2016 and 2017 and was slated to return for 2018. This bill further suspends the tax for calendar years 2018 and 2019.
A. The Children’s Health Insurance Program (CHIP) is extended for six years. Federal funding had previously ceased on September 30, 2017.
B. Three health taxes created under the Affordable Care Act are temporarily suspended or delayed:
1. Excise Tax on High-Cost Health Coverage:
The effective date of the 40% excise tax on health coverage exceeding certain thresholds (commonly referred to as the Cadillac Tax) is postponed from January 1, 2020 to January 1, 2022. The multiemployer threshold for computing the excise tax was set at $27,500 per year based on a January 1, 2018 effective date and is expected to be adjusted for inflation.
Both fully insured and self-funded health funds, including retiree only funds, are subject to this excise tax. Projected retiree medical liabilities that included this tax for 2020 and 2021 will now be lower, as the tax amounts for these years will now be removed from the liability calculation.
2. Health Insurer Fee for Fully Insured Plans:
This bill suspends the insurer tax for calendar year 2019. The insurer fee, which began in 2014, was temporarily suspended in 2017 before being re-implemented for 2018. As a result, fully insured funds with 2019 renewals should see lower premium levels than they would otherwise have seen.
3. Medical Device Tax:
The 2.3% medical device excise tax began on January 1, 2013 and is imposed on manufacturers and importers of certain medical devices. The tax was suspended for 2016 and 2017 and was slated to return for 2018. This bill further suspends the tax for calendar years 2018 and 2019.
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