On December 20, President Trump signed the Further Consolidated Appropriations Act, 2020 (the “Act”), a year-end spending bill that includes key provisions that will affect employer-sponsored benefit plans. This legal alert summarizes the provisions related to health and welfare plans and arrangements.
The Act contains the following important provisions:
- A full and permanent repeal of the 40% “Cadillac Tax” on high-cost employer-provided health coverage, originally enacted as part of the Affordable Care Act (ACA). The repeal is effective beginning in 2020. The original 2018 effective date for this tax was delayed twice by previous legislation—first to 2020 and then to 2022. Full repeal has been a long-time priority for large employer plan sponsors.
- Repeal of the 2.3% excise tax on medical devices. Many large group health plans raised concerns that the medical device tax would be passed along to patients and health plans in the form of higher costs.
- Repeal of the health insurance industry fee, also known as the “9010 fee.” The fee, which was effective 2014-2016 and again in 2018, impacts issuers of fully insured group health policies. The 9010 fee will be effective for fee year 2020, but is subsequently and permanently repealed effective December 31, 2020.
- A ten-year extension of funding for the Patient-Centered Outcomes Research Trust Fund, including an extension of the fees applicable to group health plans (including self-insured health plans) for plan years ending before October 1, 2029 (the “PCORI fee”). The fee was due to expire in 2019.
- A one-year extension of the paid family and medical leave tax credit originally enacted as part of the Tax Cuts and Jobs Act of 2017 (TCJA). This provision was made part of a companion tax extenders bill, the Taxpayer Certainty and Disaster Tax Relief Act of 2019.