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Morris Manning & Martin, LLP

Spending Bill Repeals Certain Affordable Care Act-Related Taxes; New Affordable Care Act Reporting Deadlines

01.08.2020

On December 20, 2019, President Trump signed into law spending bills that make significant changes to the Affordable Care Act (“ACA”). The bills fully repeal three ACA-related taxes: (1) the health insurance tax, (2) the Cadillac tax, and (3) the medical device tax.

The health insurance tax is a tax assessed on health insurance carriers and passed onto companies and their employees in the form of increased premiums. The tax had been frequently delayed over the past few years. The tax was in effect from 2014 through 2016, but suspended in 2017. The tax was again in effect in 2018, but suspended again in 2019. The tax will be in effect for 2020, but will be repealed altogether in 2021.

The Cadillac tax is a 40% tax on high-cost employer plans, which had been delayed from 2018 to 2022. The spending bills fully repeal the Cadillac tax beginning in 2020.

The medical device tax is a 2.3% excise tax on sales of medical devices. The spending bills fully repeal the medical devise tax beginning in 2020.

The spending bills do not affect the ACA’s employer mandate, which requires applicable large employers (those that had an average of 50 or more full-time employees or part-time equivalents during the preceding calendar year) to offer “minimum essential coverage” that provides “minimum value” and is “affordable” (as those terms as defined under the ACA) to 95% of their full-time employees (generally meaning employees working 30 hours or more per week or 130 hours or more per month).

The spending bills also do not affect the ACA’s annual reporting requirements on Forms 1094 and 1095. However, earlier in December, the IRS announced a 30 day extension the deadlines to file Forms 1094 and 1095. The new deadlines are as follows:

Filing Requirement

New 2020 Deadline

Form 1095 delivered to employee

March 2, 2020

Filing with IRS (in paper form)

Feb 28, 2020

Filing with IRS (electronically)

Mar 31, 2020

Applicable forms and instructions for 2020 are also now available on the IRS website.

If you have any questions please do not hesitate to reach out to any of your contact(s) on the Morris, Manning & Martin, LLP Employee Benefits and Executive Compensation team.