December 16, 2015 - Segal
Spending Deal Delays Affordable Care Actfs 40 Percent Excise Tax on High-Cost Health Plans
In the early hours of December 16, 2015, Congressional negotiators
reached an agreement on legislation to fund the federal government through
September 2016 and to extend certain expiring tax provisions. Included in
this deal are three provisions affecting the Affordable Care Actfs
40 percent excise tax on high-cost health plans, most notably a two-year
delay.
This excise tax is paid when the total cost of coverage exceeds
certain thresholds ($10,200 for single coverage, $27,500 for other coverage
tiers). The tax is paid on the amount by which the total cost of coverage
exceeds these thresholds.
The legislation (1) delays the effective date by two years, from
2018 to 2020; (2) makes the excise tax deductible by businesses; and
(3) calls for a study to determine how best to determine the age and gender
adjustment that can result in an increase in the base
thresholds. The House is expected to vote as early as
December 17, and the Senate will vote soon thereafter.
The two-year delay gives Congress more time to devise a longer-term
solution to the excise tax, including potentially amendment or
repeal.