Recently signed budget deal removes significant ACA taxes

On Dec. 20, 2019, President Trump signed a budget spending deal passed by Congress that includes many items related to health care:

  • It repeals significant taxes, including:
    • Cadillac Tax: Full and permanent repeal of the 40% "Cadillac Tax" on high-cost employer-provided health coverage, originally enacted as part of the Affordable Care Act (ACA), effective Jan. 1, 2020.
    • Medical Device Tax: Repeal of the 2.3% tax on the sale of medical devices enacted as part of the ACA, effective Jan. 1, 2020.
    • Health Insurance Tax: Permanent repeal of the ACA tax on fully insured plans beginning Jan. 1, 2021.
  • However, it extends the PCORI Fee:
    • Extends the application of the Patient-Centered Outcomes Research Institute Fee (PCORI) to the year 2029. The PCORI Fee had been set to expire for plan years ending after Sept. 30, 2019. The provision also appropriates funds for the PCORI program and makes changes to research priorities. The tax is about $2.45 per covered life, adjusted for inflation.  
  • Regarding exchanges:
    • Re-enrollment: Allows for re-enrollment of individuals in the Exchange (individuals who do not elect to dis-enroll).
    • Silver Loading: Protects insurers in the Exchange who engage in “Silver Loading,” which is the practice of increasing the premiums on silver-level plans to increase the premium tax credit provided, and thereby, make up for the loss of Cost Sharing Reductions.
    • Risk Corridor: Extends the prohibition on federal funding for the risk corridor program.

The spending bill does not include:

  • Regulations to protect patients from surprise medical bills.
  • Any other major provisions for reducing drug prices.

Other funded items in the budget spending deal on areas beyond health care include increases in defense funding, allocations for studying gun violence and money and some flexibility for building and replacing the wall on the border. The budget also includes a measure to increase the minimum age for buying tobacco to age 21.

We will continue to share information as this evolves. Contact your Broker or UnitedHealthcare account representative if you have questions.