The House of Representatives voted Wednesday, July 17, 2019 to repeal the ACA’s* excise tax on high-cost plans (often referred to as the "Cadillac" tax). Beginning in 2022, the Cadillac tax created a 40 percent excise tax on the value of employer-provided health coverage in excess of indexed thresholds, starting at $10,200 for individual and $27,500 for a family. The goal was to raise revenue to pay for the ACA while encouraging employers to limit expensive health plan offerings. Wednesday’s vote was nearly unanimous, with only six lawmakers voting against repeal and 419 in favor. The bill will now go to the Senate.

In other healthcare news breaking Wednesday, the Internal Revenue Service (IRS) issued guidance expanding the utility of Health Savings Accounts (HSAs). IRS Notice 2019-45 adds to the list of preventive care services that can be covered by a qualified high deductible health plan (HDHP) without a deductible or before the existing deductible is met. Allowable categories of care include treatment for chronic conditions such as heart disease, diabetes, and depression, in addition to other services.

What You Need to Know

  • Before the Cadillac tax repeal can take effect, the Senate must still pass its own repeal measure, and the president must sign the final law. In the meantime, employers should assess how repeal may impact future planning.
  • Continued uncertainty surrounds if or how Congress may act in the future to address both the rising costs of medical care and the revenue shortfall that would be created by a Cadillac tax repeal.
  • Qualified HDHPs can now provide zero-cost preventive care services for several chronic health conditions without impairing an employee’s HSA eligibility.
  • Employers offering HSAs should evaluate what this means for employees and look at next steps to educate and increase engagement. Employers not currently offering an HSA qualified option may want to consider whether this tool makes sense for them.

We’re Here to Help

As always, American Fidelity is committed to providing our customers with up-to-date information on employee health and welfare benefits compliance. For more information about this and other regulatory developments, visit our website at HCReducation.com.

 


 

*Patient Protection and Affordable Care Act

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