On January 22, President Trump signed into law H.R. 195, the “Federal Register Printing Savings Act of 2017 (the Act).” The Act ends the government shutdown and funds the government through February 8. It also suspends several Affordable Care Act (ACA) taxes.
Before enactment of this new act, for tax years beginning after December 31, 2019, a 40% excise tax was scheduled to apply to any “excess benefit” provided to any employee who is covered under any “applicable employer-sponsored coverage.” It is known as the “Cadillac” tax because it affects upper-end employer-sponsored insurance coverage. It is imposed on the coverage provider – typically, the health insurance provider or the entity that administers the plan benefits. The Cadillac tax was originally scheduled to apply for tax years beginning after 2017, but it has been delayed a number of times, most recently by the 2016 Consolidated Appropriations Act.
Under this new law, the Cadillac tax is delayed for an additional two years, such that it is now scheduled to apply for tax years beginning after December 31, 2021.
Medical device excise tax
Under the old rule, for tax years beginning after December 31, 2017, a 2.3%-of-sales-price excise tax was to be imposed on the sale of any taxable medical device by the device’s manufacturer, producer, or importer. The medical device excise tax was scheduled to apply for sales after December 31, 2012, but it has been suspended, most recently by the 2015 Protecting Americans from Tax Hikes (PATH) Act.
The new law further delays the medical device excise tax for an additional two years, such that it is now scheduled to apply to sales after December 31, 2019. The delay goes into effect for sales after December 31, 2017; in other words, the delay is retroactive to the beginning of 2018.
Annual fee on health insurance providers
Effective for calendar years beginning after December 31, 2013, covered entities engaged in the business of providing health insurance with respect to U.S. health risks face an annual flat fee. The fee is a fixed amount allocated among all covered entities in proportion to their relative market share as determined by each entity’s net premiums written for the data year, which is the year immediately preceding the year in which the fee is paid. The annual fee on health insurance providers was suspended for 2017 by the 2016 Consolidated Appropriations Act.
Under the new law, the annual fee on health insurance providers has been further suspended for 2019. However, it remains in effect for 2018.
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