Cadillac Tax & “HIT” tax Delayed

As you may have heard, yesterday President Obama signed into law an omnibus spending appropriations bill, and contained in this were several significant changes to the “Cadillac Tax” section of the Affordable Care Act. Here are the highlights:

  • The effective date of the Cadillac Tax has been delayed until January 1, 2020
  • Any excise tax levied will now be fully tax deductible for employers
  • The government will fund an official study by the comptroller on appropriate age and gender adjustments in consultation with the National Association of Insurance Commissioners (NAIC)

HIT Tax Suspended and IPAB Defunded The Omnibus bill affects several other Affordable Care Act provisions, including:

  • It suspends the health insurance industry fee for 2017. This is often referred to as the “HIT” tax or health insurance tax. This tax applies to insured plans only, so has provided an incentive for insured employers to change to self funding to avoid this additional tax.
  • It defunds the Independent Payment Advisory Board (IPAB), a 15-member panel of health care experts created by the ACA (sections 3403 and 10320) and tasked with making annual cost-cutting recommendations for Medicare if Medicare spending exceeds a specified growth rate.
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