On Monday, January 22, 2018, Congress passed a stopgap measure to keep the government funded for an additional three weeks while they continue to work on a permanent spending bill for 2018. As part of that bill, three important ACA taxes are affected - the Cadillac Tax, the medical device tax and the health insurance tax.

The Cadillac Tax has been delayed for an additional two years. Currently scheduled to go into effect in 2020, the new effective date is 2022. Both Republicans and Democrats are trying to eliminate this tax on high-cost healthcare, but the way the government "scores" parts of the budget makes that difficult given its massive $80 billion revenue estimate (experts contend its actual revenue will likely be half of that, but $80 billion is the official number that needs to be used). By delaying this tax an additional two years, lawmakers will have additional time to figure out how to eliminate or replace this tax. To date, the IRS has yet to even publish any substantial rules on how this tax would actually work, leaving employers scratching their heads on how to deal with it. This delay will be welcome news for employers.

The medical device tax is assessed on device makers, and passed on to purchasers of those devices. Republicans originally tried to eliminate this tax in their recently-passed tax overhaul but were unable to do so. Like the Cadillac tax, the repeal of this provision also has Democratic support. The tax is now delayed through December 31, 2019.

Finally, the tax on health insurers - which affects employers with fully-insured health plans - is also suspended - for 2019. Congress felt that suspending it for 2018 would be problematic for carriers given that 2018 plan years have already been priced and gone into effect. The net result is that the tax will not apply in calendar year 2019.

Outside of these revenue provisions, the continuing resolution also funds the CHIP program for a full six years.

The continuing resolution only funds the government for three additional weeks, so there will need to be another vote (and another potential shutdown) in February. We will continue to monitor the situation and communicate updates as warranted.

Information contained herein is not intended to constitute tax or legal advice and should not be used for purposes of evading or avoiding otherwise applicable regulatory responsibilities as issued by the federal or state government(s) and/or taxes owed under the Internal Revenue Code. You are encouraged to seek advice from your legal or tax advisor based on your circumstances