Suspension of Obamacare Taxes, Including the Cadillac Tax
On January 23, 2018, Congress passed, and President Trump signed into law, a stopgap spending deal that ended the shutdown of the federal government.
Included in this deal are the suspensions of three taxes:
- The Cadillac Tax was delayed for two additional years, from 2020 until 2022. This tax would have imposed a 40% surcharge on employer sponsored health plans with premiums of more than $10,200 per year for individuals and $27,500 per year for families (these premium levels are estimates). The Cadillac Tax was previously delayed from 2018 to 2020.
- The Health Insurer Tax (HIT), which was included in all fully insured health insurance premiums, is projected to collect more than $14 billion in revenue in 2018. It is suspended in 2019. It will continue in 2018, and again in 2020.
- The 2.3% Medical Device Tax which imposed an excise tax on the sale of certain medical devices was delayed for two years, and will now begin in January 2020. The Congressional Budget Office estimated that $3.27 billion would have collected from device makers in 2018 and in 2019 if the tax were in effect.
The Congressional Joint Committee on Taxation projected that suspension of these three taxes will add $31.25 billion to the federal budget deficit over the next several years.In addition to suspending these three Obamacare taxes as part of its deal to end the shutdown, Congress authorized funding of the Children’s Health Insurance Program (CHIP), which provides health coverage to about 9 million children, for six more years.
More information can be found at:
https://www.irs.gov/businesses/corporations/affordable-care-act-provision-9010
https://www.jct.gov/publications.html?func=startdown&id=5058