Capitol with a Santa cap (Image: Allison Bell/ALM)

Congress may be about to write off about $348 billion in tax revenue streams related to the Affordable Care Act that, as a body, it was not especially eager to collect.

Congress has included two major ACA revenue raiser repeal provisions in the Further Consolidated Appropriations Act, 2020 (FCAA 2020) package.

One provision would repeal the ACA ”annual fee on health insurance providers,” which is also known as the health insurer tax. That could cost the federal government about $197 billion in revenue from 2020 through 2029, according to analysts at the Joint Committee on Taxation, a congressional budget analysis service.

(Related: 7 Possible Obstacles to Secure Act Bliss)

Health insurer tax repeal is in Section 502 in Title I — Health and Human Services Extenders. Title I — Health and Human Services Extenders is part of FCAA 2020 Division N.

The other provision on track to be cut is the “40% excise tax on high-cost employer-sponsored health coverage,” which is popularly known as the Cadillac plan tax. Permanently killing the Cadillac plan tax could eliminate about $151 billion in revenue over 10 years, according to the budget analysts.

Cadillac plan tax repeal is in Section 503 of FCAA 2020 Division N, Title I.

Although the two FCAA 2020 provisions could be costly in terms of what budget analysts have included in official federal budget analyses, they may not have much real impact on federal government revenue.

Congress has let the health insurer tax take effect only occasionally, and it has repeatedly postponed the start date of the Cadillac plan tax.

The United States has been spending about $1.2 billion per year on private health coverage, and about $160 billion per year on the “net cost of insurance,” or health insurance expenses other than claims. That means the savings for health insurers, employer plan sponsors and plan enrollees from the two FCAA 2020 provisions could amount to about 3% of total health coverage expenditures and about 20% of plan expenditures on items other than claims.

FCAA 2020 Nuts and Bolts

House leaders have used an amendment to H.R. 1865, a commemorative coin bill, to ferry the FCAA 2020 package through the House.

Congress must get the FCAA 2020, or a similar package, passed by Friday, or much of the federal government will shut down.

House members today voted 297-120 to pass the bill. Observers have said the package could reach the Senate floor as early as today.

In addition to the two ACA health coverage revenue raiser repeal provisions, 2020 includes provisions that would:

  • Ban any entities from using money from FCAA 2020 to lobby on behalf of the Affordable Care Act.
  • Ban the U.S. Department of Health and Human Services from using FCAA 2020 money to make the payments to health insurers owed under the ACA risk corridors program. The ACA risk corridors program was supposed to use money from thriving ACA exchange plan issuers collected from 2014 through 2016 to compensate struggling ACA exchange plan issuers. The program never collected enough money from thriving issuers to pay much of what the issuers were expecting to get.
  • Implement the Secure Act retirement program package.

The Joint Committee Taxation analysts estimate the Secure Act would reduce federal revenue by only about $14 billion from 2020 through 2029.

Resources

A copy of the 1,773-page Further Consolidated Appropriations Act, 2020 package is available here.

A link to the Joint Committee on Taxation analysis of FCAA 2020 is available here.

— Read 7 (Polite) Life and Annuity Player Whoops of Joy for the Return of the Secure Act, on ThinkAdvisor.

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