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Congress May Leave Big ACA Taxes Intact

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Members of the Senate are supposed to be home for Christmas.

Senate leaders have asked senators to return to Washington today, to consider anti-government-shutdown funding legislation, but the Senate may then leave three big Affordable Care Act (ACA) tax provisions — the $16 billion-per-year ACA health insurer tax, the ACA “Cadillac plan” excise tax, and the ACA medical device excise tax — intact.

The House passed H.R. 88, the bill that is serving as the vehicle for a package of tax and retirement measures proposed by House Ways and Means Chairman Kevin Brady, by a 220-183 vote Thursday.

(Related: Democrats’ Strategy for Senate Wins Diverges in Western Desert)

House members voted almost entirely along party lines. No Democrats crossed party lines to vote for the bill. Just three of the 223 Republicans who participated voted against it.

Politico is reporting that Senate Republican leaders are unlikely to bring tax legislation to the Senate floor before the Senate ends its current session.

The 116th Congress is set to start its term Jan. 3.

Congress has already eliminated the health insurer tax for 2019 and 2020, and postponed the start of the Cadillac plan tax, or 40% excise tax on what the government classifies as high-cost health benefits packages, until Dec. 31, 2021.

Congress has suspended the medical device tax until 2020.

An amendment to H.R. 88 would suspend the health insurer tax until after 2021 and the start of the Cadillac plan tax until 2023.

The Medical device tax would be suspended until 2024.

Health insurers and benefit plan administrators have noted that, from their perspective, delaying and suspending the taxes in advance is important, because, if they believe a tax will take effect at a certain time, they may have to begin taking actions a year or more in advance to comply with the tax provision.

Health insurers are already preparing major medical insurance rates for 2020, for example, and insurers will have to set the 2020 rates with the understanding that they may have to pay an extra federal tax in 2021.


The House Rules H.R. 88 meeting package is available here.

Information about the House floor action on the bill is available here.

Details about the House vote are available here.

— Read Brady Tax and Retirement Plan Package Hits Turbulenceon ThinkAdvisor.

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