On December 18, 2015, President Obama signed the Federal Budget for 2016 (the "Budget") with several changes to key funding provisions of the Patient Protection and Affordable Care Act ("ACA").
The ACA’s so called "Cadillac Tax," a 40% excise tax on high-cost employer-sponsored health plans, is now delayed until the year 2020. This tax had been the subject of much ACA criticism, particularly when considering that the ACA generally promotes choice of insurer and provider flexibility in health insurance offerings.
The Budget also suspends the ACA’s medical device tax. This 2.3% tax on manufacturers and importers for sales of medical devices will be suspended for two years and will become effective again December 31, 2017.
Finally, the Budget delays the ACA’s health insurance provider’s fee. This provider’s fee, which is treated as an excise tax, became effective in 2014. The collection of this provider’s fee is suspended for the 2017 calendar year in accordance with the Budget. Supporters of the Budget are hopeful that the suspension this fee, which is imposed upon health insurance providers and allocated according to market share, will be one less fee or expense being rolled to employers on their health insurance rates.
While it is difficult to determine the future impact that these ACA tax provision delays and suspensions will have, it is clear that the ACA and its various provisions are valuable bargaining chips for both political parties.
Corporate entities should follow this story as it continues to develop. The regular changes to the ACA can make compliance a challenge for businesses of all sizes. For more information on the Patient Protection and Affordable Care Act, or other healthcare, labor, and employment issues, please contact Adam B. Kuenning with Erickson | Sederstrom.