steps have been taken in 2017 toward repealing the Affordable Care
Act (ACA), including the introduction of the American Health Care Act
(AHCA). Although the AHCA was withdrawn by Republicans, Congress
may choose to pursue another ACA repeal and replacement bill in the
the future of the ACA as a whole is currently unclear, some
definitive changes have been made to some ACA taxes and fees for
federal budget bill enacted for 2016 made the following significant
changes to three ACA tax provisions:
implementation of the ACA’s Cadillac tax for two years, until 2020;
a one-year moratorium on the ACA’s health insurance providers fee
for 2017; and
a two-year moratorium on the ACA’s medical device excise tax for
2016 and 2017.
addition, the ACA’s reinsurance fee expired after 2016, although
the 2016 fees will be paid in 2017.
Failure of the AHCA
24, 2017, Republican leadership in the U.S. House of
Representatives withdrew the AHCA—their proposed
legislation to repeal and replace the ACA. A House vote was
scheduled to take place on that day, but House Republicans could
not secure enough votes to approve the legislation and, instead,
canceled the vote. As a
result, the ACA will remain in place at this time.
Cadillac Tax Delayed
imposes a 40 percent excise tax on high-cost group health coverage,
also known as the “Cadillac tax.” This provision taxes the amount,
if any, by which the monthly cost of an employee's applicable
employer-sponsored health coverage exceeds the annual limitation (called
the employee’s excess benefit). The tax amount for each employee’s
coverage will be calculated by the employer and paid by the
coverage provider who provided the coverage.
originally intended to take effect in 2013, the Cadillac tax was immediately
delayed until 2018 following the ACA’s enactment. The 2016 federal
budget further delayed implementation of this tax for an additional
two years, until 2020. The 2016 federal budget bill also:
Ø Removed a
provision prohibiting the Cadillac tax from being deducted as a
business expense; and
a study to be conducted on the age and gender adjustment to the
some indication that this additional delay will lead to an eventual
repeal of the Cadillac tax provision altogether. Over the past
several years, a number of bills have been introduced into Congress
to repeal this tax. Although President Trump has not directly
indicated that he intends to repeal the Cadillac tax, he has stated
that repealing and replacing the ACA is a main goal for his
on the Providers Fee
in 2014, the ACA imposed an annual, nondeductible fee on the health
insurance sector, allocated across the industry according to market
share. This health insurance providers fee,
which is treated as an excise tax, is required to be paid by
September 30 of each calendar year. The first fees were due
September 30, 2014.
federal budget suspended collection of the health insurance providers fee for the 2017 calendar year. Thus, health insurance issuers
are not required to pay these fees for 2017. Employers are not
directly subject to the health insurance providers
fee. However, in many cases, providers of insured plans have been
passing the cost of the fee on to the employers sponsoring the
coverage. As a result, this one-year moratorium may result in
significant savings for some employers on their health insurance
on the Medical Devices Tax
also imposes a 2.3 percent excise tax on the sales price of certain
medical devices, effective beginning in 2013. Generally, the
manufacturer or importer of a taxable medical device is responsible
for reporting and paying this tax to the IRS.
federal budget suspended collection of the medical devices tax for
two years, in 2016 and 2017. As
a result, this tax does not apply to sales made between January 1,
2016 and December 31, 2017.
ACA, health insurance issuers and self-funded group health plans
must also pay fees to support a transitional reinsurance program
for the first three years of Exchange operation (2014-16) to help
stabilize premiums for individual market coverage. Fully insured
plan sponsors do not have to pay the fee directly.
the transitional reinsurance program was operational only through
2016, the reinsurance fees
do not apply for 2017 and beyond (although the 2016 fees will be
paid in 2017). Reinsurance fees may be paid in either one lump
sum or in two installments. For the 2016 benefit year, reinsurance
fees are due as follows:
in Two Installments
in One Lump Sum
Nov. 15, 2016:
Submit the 2016 contribution form and schedule payment of the
first collection, then duplicate the form and schedule payment of the second collection.
Jan. 15, 2017: Remit
the first contribution amount of $21.60 per covered life.
Nov. 15, 2017: Remit
the second contribution amount of $5.40 per covered life.
Nov. 15, 2016: Submit
the 2016 contribution form and schedule payment.
Jan. 15, 2017: Pay
the full contribution amount of $27 per covered life.