President Obama signed a federal budget bill for 2016 that makes significant changes to three tax provisions under the Affordable Care Act (ACA):

1. Delays the implementation of the ACA’s Cadillac tax on high-cost group health coverage for two years, until 2020;

2. Imposes a one-year moratorium on the collection of the ACA’s health insurance providers fee, for 2017; and

3. Imposes a two-year moratorium on the ACA’s medical device excise tax, for 2016 and 2017.

Cadillac Tax Delayed
The ACA imposes a 40 percent excise tax on employer-sponsored health coverage that exceeds the annual limitations of $10,200/individual coverage and $27,500/family coverage. This tax is intended to encourage companies to choose lower-cost health plans for their employees, but also to raise revenue to fund other ACA provisions. The 2016 federal budget bill:

• Delays implementation of this tax for an additional two years, until 2020;
• Removes a provision prohibiting the Cadillac tax from being deducted as a business expense; and
• Requires a study to be conducted on the age and gender adjustment to the annual limit.

Although this federal budget bill makes significant changes to these three ACA taxes, it does not affect any other ACA provision. Therefore, all other aspects of the ACA continue to apply as they did prior to this bill’s enactment, with no changes or delays.

Contact your NEEBCo representative with questions.