In enacting the Further Consolidated Appropriations Act, 2020, (the “Act”), Congress, among other changes, enacted the following key changes affecting employer group health plans:
- Repeal of the Cadillac Tax: Most notably, and a huge relief to most employers, Congress repealed the Cadillac tax. The Affordable Care Act (“ACA”) added a requirement requiring employers to pay a 40% excise tax on the value of “rich” health plans (i.e., those that exceed $10,200 for an individual and $27,500 for a family, indexed for inflation). The excise tax was originally scheduled to take effect for taxable years beginning after 2017, but it was delayed two years by subsequent legislation. On January 22, 2018, legislation again delayed the excise tax for another two years until 2022. Rather than kicking the can down the road a third time, Congress finally repealed the Cadillac tax.
- 10-Year Extension of PCORI Fees: In less welcome news, Congress reinstated PCORI fees for an additional ten years. As reported in our October 2019 newsletter, “2019 End of Year Plan Sponsor “To Do” List (Part 1) Health & Welfare,” health insurance issuers and sponsors of self-insured health plans were required to report and pay PCORI fees for plan and policy years ending before October 1, 2019. Many calendar year plan sponsors thought they had paid their final PCORI fee in 2019, which were due July 31, 2019. Some non-calendar year plans may still owe a PCORI fee for the 2019 plan year. The Act reinstates PCORI fees for ten years, for plan and policy years ending before October 1, 2029. The amount due per covered life will continue to be subject to annual adjustment. Plans will need to budget appropriately for this additional expense.