As 2019 drew to a close, President Trump signed into law the Further Consolidated Appropriations Act, 2020. Many of its provisions significantly affect the health care benefits landscape. Here's a recap of some of the most important changes.
A couple of items enacted under the Affordable Care Act (ACA), which had previously been delayed or suspended, are now repealed:
1. The Cadillac tax. An excise tax on high-cost health coverage, the Cadillac tax would have imposed a 40% tax on the cost of employer-sponsored health benefits exceeding specified statutory thresholds starting in 2022.
2. The annual fee on health insurance providers. Defined to include health insurers, HMOs and multiple employer welfare arrangements, this fee was due to become effective on January 1, 2021. It would have been apportioned among covered providers based on their relative U.S. health insurance market share.
The act modifies or extends certain other provisions as well, including:
Reinstatement of PCOR fees.To support clinical effectiveness research, the ACA created the Patient-Centered Outcomes Research (PCOR) Institute and funded it in part by fees from certain health insurers and self-insured health plan sponsors. Under the ACA provision, PCOR fees were collected for plan years ending on or after October 1, 2012, and before October 1, 2019. The new law reinstates the PCOR provision and continues the fee requirements through plan years ending before October 1, 2029. Appropriations for research are extended through the government's 2029 fiscal year.
Deductible medical expenses. The ACA increased the threshold for deductible medical expenses from 7.5% to 10% of adjusted gross income, but the Tax Cuts and Jobs Act (TCJA) reinstated the 7.5% threshold for 2017 and 2018. The new law retains the 7.5% threshold for 2019 and 2020. In other words, the 10% threshold never really took effect.
Employer tax credit for paid family and medical leave. The TCJA created a tax credit for eligible employers providing paid family and medical leave to their employees for 2018 and 2019. The act extends it through 2020.
The Health Coverage Tax Credit. This tax credit is available to eligible individuals who experience qualifying job losses. It was scheduled to expire at the end of 2019 but has been extended for one year.
A new year often brings changes to the rules and regulations governing health care benefits — as well as many other things, for that matter. 2020 is no exception; in fact, the revisions noted above are important ones for every employer to keep in mind throughout the year.
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