Government Funding Legislation Delays Cadillac Plan Tax Until 2022 | Practical Law

Government Funding Legislation Delays Cadillac Plan Tax Until 2022 | Practical Law

President Trump has signed into law H.R. 195, which funds the federal government until February 8, 2018. The law includes provisions that delay the Cadillac Plan Tax until 2022, extend the Children's Health Insurance Program (CHIP) until 2023, and suspend the annual fees imposed on health insurance providers under Section 9010 of the Affordable Care Act (ACA) for the 2019 calendar year.

Government Funding Legislation Delays Cadillac Plan Tax Until 2022

Practical Law Legal Update w-012-7869 (Approx. 3 pages)

Government Funding Legislation Delays Cadillac Plan Tax Until 2022

by Practical Law Employee Benefits & Executive Compensation
Published on 23 Jan 2018 • USA (National/Federal)
President Trump has signed into law H.R. 195, which funds the federal government until February 8, 2018. The law includes provisions that delay the Cadillac Plan Tax until 2022, extend the Children's Health Insurance Program (CHIP) until 2023, and suspend the annual fees imposed on health insurance providers under Section 9010 of the Affordable Care Act (ACA) for the 2019 calendar year.
On January 22, 2018, President Trump signed into law H.R. 195, which continues to fund the federal government until February 8, 2018. The legislation also includes provisions that:
  • Delay until 2022 the Cadillac Plan Tax, which was added under the Affordable Care Act (ACA).
  • Extend funding for the Children's Health Insurance Program (CHIP) through 2023.
  • Suspends the annual fees imposed on health insurance providers under ACA Section 9010 for the 2019 calendar year.

Cadillac Plan Tax Delayed Until 2022

The ACA imposes a 40% excise tax on certain high cost employer-sponsored health coverage (known as the Cadillac Plan Tax) (26 U.S.C. § 4980I; see Article, Cadillac Plan Excise Tax Under the ACA). Plans are subject to the excise tax if the cost of employer-sponsored health coverage for employees exceeds an annual dollar limit.
The Cadillac Plan Tax was originally scheduled to apply for tax years beginning after 2017. However, the Consolidated Appropriations Act of 2016 delayed the provision's effective date by two years, until 2020 (see Legal Update, Consolidated Appropriations Act of 2016 Postpones Cadillac Tax and Permanently Extends Transit Benefit Parity). The legislation (H.R. 195) delays the Cadillac Plan Tax through December 31, 2021, so that it will now apply beginning in 2022.

CHIP Extension

The legislation extends CHIP funding for six years, through 2023. CHIP funding had expired September 30, 2017.

Suspension of ACA Section 9010 Fees

The legislation also suspends ACA Section 9010 fees for the 2019 calendar year. ACA Section 9010 imposes a fee on covered entities engaged in the business of providing health insurance for US health risks (see Practice Note, Expatriate Health Plans Under EHCCA and the ACA: ACA Section 9010 Annual Fees Apply to Health Insurers and Other Entities). The Consolidated Appropriations Act of 2016 delayed the fees for the 2017 calendar year. However, the legislation (H.R. 195) does not suspend the fees for the 2018 calendar year.