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Three ACA Taxes Repealed & Federal Appeals Court Ruling

On Friday, December 20th, President Trump signed H.R. 1865 into law, the Further Consolidated Appropriations Act of 2020, which included a full repeal of three taxes originally imposed by the Affordable Care Act (ACA):

  • Repeal of the Cadillac Tax beginning in 2020, which would have imposed a 40% excise tax on employer-sponsored coverage
  • Repeal of the Health Insurer Tax beginning in 2021, which imposed an annual, nondeductible fee on the health insurance sector allocated across the industry according to market share; also known as the Health Insurance Industry Fee, it is required to be paid by September 30th of each calendar year
  • and Repeal of the Medical Device Tax beginning in 2020, which imposed a 2.3% excise tax on the sales price of certain medical devices

Separately, on December 18th, the United States Court of Appeals for the Fifth Circuit ruled the ACA’s individual mandate unconstitutional due to the elimination of the individual mandate penalty in 2019. It did not, however, invalidate the rest of the law. As a result, the rest of the law remains in effect — except for the aforementioned repealed taxes. The lower court is now tasked with determining whether the rest of the ACA may be severed from the individual mandate provision.

As additional information is released, we will keep you informed and guide you through any change that may impact your organization. In the meantime, download the below articles to learn more.

Should you have any questions, please don’t hesitate to reach out to Creative Benefits at 866-306-0200.