Year-end Congressional Spending Bill Repeals ACA Taxes and Extends PCORI Fee

Vectra DigitalBlog, Health & Welfare, Multiemployer / Taft-Hartley Plan, Private Self-Funded Health Plan

As part of a year-end spending bill that was signed in law last Friday, Congress passed a repeal of several ACA taxes, an extension of the PCORI fee, and a number of revisions to retirement savings plans. Foster & Foster outlined changes to employer-sponsored and individual retirement accounts here. Below, we highlight several changes relevant to health plans:

  • Permanent repeal of the excise tax on high cost employer-sponsored health coverage, otherwise known as the Cadillac Tax, that was set to go into effect in 2022 after being twice delayed by Congress.
    This provides relief to employer health plans that have higher costs, whether that is to provide a richer benefit to employees or due to higher medical care costs.
  • Permanent repeal of the 2.3% tax on medical devices—which applied to manufacturers, producers, and importers (but not individuals)—that would have applied to sales made on or after January 1, 2020.
    Opponents of this tax argued that this tax would be passed down to patients through higher medical costs. It has been suspended since 2016. 
  • Permanent repeal of an annual fee assessed to fully insured health insurance providers (known as the Health Insurer Fee or HIF), which was suspended for 2019, will become effective January 1, 2021.
    This fee was typically passed on to consumers in the form of higher health insurance premiums It is effective and included in 2020 fully insured rates, but will not be included beginning in 2021. 
  • Ten-year extension of the PCORI fee, which is a health inflation-based fee on health insurers and employer health plans to fund the Patient-Centered Outreach Research Institute (PCORI).
    Foster & Foster calculates the amount of this fee annually for its self-insured clients; the PCORI fee for plan years ending October 1, 2018 through September 30, 2019 was $2.45 per US life. The amount of the fee for subsequent plan years has yet to be determined.

If you have any questions about the impacts of these changes on your benefits program, please contact your consultant.