Employee Benefits Compliance, Taxes, Fees & Penalties

Government “Un-Shut” Down Includes 2-Year Delay for Cadillac Tax

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On January 22nd, the Senate passed a Continuing Resolution (CR) (81-18) to fund the federal government through February 8.  It is expected that the House will approve the CR also, and the President will sign it.

Three items in the Continuing Resolution (CR) that directly affect health benefits are:

    1. Two-year delay of the Cadillac Tax
    2. One-year suspension of the health insurance tax (HIT).
    3. Two-year suspension of the medical device tax

 

Additional Information

The Act, which is officially entitled the Extension of Continuing Appropriations Act, 2018, is at http://docs.house.gov/billsthisweek/20180115/BILLS-115SAHR195-RCP115-55.pdf .

Three items in the Continuing Resolution (CR) that directly affect health benefits are:

    1. Two-year delay of the Cadillac Tax on health insurance plans, from 2020 to 2022.
      • The Cadillac Tax will impose an annual 40% excise tax on plans with annual premiums exceeding $10,800 for individuals or $29,500 for a family.
      • Some higher thresholds for employees in high-risk occupations, and the thresholds are indexed so even if it is effective in 2022 it’s likely the thresholds will be higher than those stated above.
    2. One-year suspension of the health insurance tax (HIT).
      • The HIT tax was already suspended in 2017 and was just reinstated in 2018.
      • It remains in effect for 2018.
      • The one-year suspension in the CR means the tax is now suspended for 2019.
    3. Two-year suspension of the medical device tax
      • This tax is now suspended for 2018 and 2019.
      • This was in effect from 2013-15.  It was suspended in 2016-17.  It was reinstated Jan. 1, 2018.      It is now suspended for 2018 and 2019.

 

The CR would also exempt these changes from the Statutory Pay-As-You-Go Act, which requires offsetting spending cuts to fund this tax relief.

Additionally, the CR extends the CHIP program for six years, from fiscal year 2018 through fiscal year 2023.

The CR does NOT extend the DACA program, but Sen. Majority Leader Mitch McConnell agreed to begin debate on immigration policy, the issue that stalled the budget passage, by February 8th.  (DACA is the Deferred Action for Childhood Arrivals program, an Obama-era program that shields young undocumented immigrants from deportation.)