Spending Package Impacts Cadillac Tax and PCORI Fees

There’s good news and bad news under President Trump’s new spending package, which includes the Further Consolidated Appropriations Act (“FCAA”). The good news is the FCAA has repealed the “Cadillac Tax” which was the part of the Affordable Care Act imposing a tax on high-cost coverage. Interestingly, its repeal comes before employers were even required to comply given the unpopular tax was previously delayed until 2022. More good news is that the budget legislation also repealed, effective 2021, the annual fee on health insurance providers. The repeal of this fee, which health care reform had imposed on certain entities engaged in the business of providing health insurance with respect to United States health risks, is in contrast to the extension of the PCORI fee. This is the bad news.  Specifically, the Patient-Centered Outcomes Research Institute, created by health care reform, is funded in part by fees paid by health insurers and sponsors of self-insured plans. Generally, PCORI payments made in 2019 were slated to be the last. This has all changed now that the FCAA reinstated and extended the PCORI fee requirements through 2029.  Most employers did not include the PCORI fee in their 2020 budget, so it is important to plan for that payment now.

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