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3 Anti-Government Shutdown Bill Tax Facts, for Health Agents

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A critical bill that could keep the federal government running until Feb. 16 could also cut health insurers’ and employer health plans’ taxes by a total of about $29 billion over 10 years.

Lawmakers in the House have included the tax provisions in the “Extension of Continuing Appropriations Act, 2018″ (ECAA) bill.

If President Donald Trump fails to sign the ECAA bill, or another appropriations extension bill, into law quickly, the federal government could begin a partial shutdown at midnight on Friday.

(Related: Shutdown Risk Spikes as Congress Faces Another December Deadline)

The anti-shutdown bill does not include any provisions that Republican congressional leaders regard as controversial, such as a permanent repeal of any part of the Affordable Care Act.

In addition to providing permission for the federal government to spend money from midnight Friday through Feb. 16, the bill would provide six years of funding for the Children’s Health Insurance Program (CHIP).

Drafters have also added three tax provisions near the end of the ECAA bill, in Divison D.

The provisions would postpone the effective date of two Affordable Care Act taxes for two years and one for one year.

House leaders are hoping to rush the bill onto the House floor Thursday.

Here are three things for agents, brokers and others in the health insurance and health benefits communities to know about the bill.

 Weird green Cadillac (Photo: Dorling Kindersley/Thinkstock)

(Photo: Dorling Kindersley/Thinkstock)

1. The bill is hard to find. 

For procedural reasons, House leaders have packaged the text of House Joint Resolution 125 inside H.R. 195.

H.R. 195 is a bill that originally was supposed to keep anyone other than members of Congress, and other offices and employees of the United States, from getting copies of the Federal Register for free.

The bill is described as a Senate amendment to the text of H.R. 195.

A copy of the ECAA spending bill is available here.

The House Rules Committee — a House panel that gets legislation ready for floor action — held a meeting on H.J. Res. 125 Wednesday. The committee posted links to a collection of bill information sources here.

The site includes a link to another copy of the bill, a summary of the bill, and a video of the House Rules meeting on the bill.

House Rules members ended up agreeing, on a 9-3 party-line vote, to approve a rule that will send the bill to the House floor as House Resolution 696.

H.R. 696 provides for the consideration of the Senate amendment to H.R. 195.

The rule approved provides for one hour of debate on H.R. 696, equally divided, and it gives House Speaker Paul Ryan extra flexibility to get the measure up on the House floor on Saturday, if the House is still deliberating on the measure on Saturday.

House Majority Leader Kevin McCarthy posted a schedule showing that the measure could come to the House floor Thursday, and that votes on the measure could start between 2:30 p.m. and 8 p.m.

2. ECAA Division D would change three Affordable Care Act tax provisions that business groups have been fighting to change for years.

ECAA Division D would make the following ACA tax changes:

  • It would postpone the restart date of the ACA medical device tax (which was collected from 2013 through 2015) for two years, to sales made after Dec. 31, 2019.

  • It would postpone the start date of the ACA “Cadillac plan tax,” or excise tax on high-cost group health coverage, two years, to plan years starting after Dec. 31, 2021.

  • It would postpone the restart date of the ACA “health insurer fee,” or money-raising tax on health coverage issuers (which was collected from 2013 through 2016), for one year, to plan years beginning after Dec. 31, 2019.

The federal government generates about $3.7 trillion in revenue per year and spends about $4.1 trillion per year.

Analysts at the Congressional Budget Office (CBO) estimate the medical device tax provision would cost the federal government about $3.8 billion in revenue from 2018 through 2027.

The CBO analysts estimate that postponing the Cadillac plan tax would reduce government revenue by about $17 billion over 10 years, and that postponing the restart date for the health insurer fee would reduce revenue by about $13 billion over 10 years.

3. The Affordable Care Act tax provisions caught the attention of House Rules Committee Democrats.

Rep. Rodney Frelinghuysen, R-N.J., chairman of the House Appropriations Committee, came to the House Rules Committee with Rep. Nita Lowey, D-N.Y., to explain the ECAA bill.

Rep. Jared Polis, D-Colo., told Frelinghuysen that it’s unusual for a spending bill to include tax provisions, especially just two weeks after the passage of the Tax Cuts and Jobs Act, a major tax bill.

Polis said that he personally supports the idea of repealing the medical device tax but dislikes seeing tax provisions in a spending bill.

“These are big tax things,” Polis told Frelinghuysen. “How did this become another tax bill?”

“Maybe to attract some votes,” Frelinghuysen said.

Lowey said drafters may have added the provisions “to sweeten the bill” for House members.

Rep. Pete Sessions, R-Texas, the chairman of the committee, said he believes House leaders added the provisions because they think letting the three Affordable Care Act taxes take effect on the current schedule would increase seniors’ health care costs. 

CORRECTIONS: The ECAA bill would postpone the restart date of the ACA medicare device tax and the ACA health insurer fee. Those provisions were described incorrectly in an earlier version of this story. The story also gave an incorrect description of the health insurer fee moratorium. The fee would be suspended for one year.

—Read Cadillac Plan Tax Math May Shape ACA Attack on ThinkAdvisor.

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