Compliance Update: House & Senate Pass Spending Bill That Would Repeal Some ACA Taxes

New Compliance Update

The Federal Spending Bill has now passed both the House and the Senate. The next step is the President to sign it into law, which he is expected to do. In addition to increasing the legal age for Tobacco Purchases, three health care taxes are repealed.


The 2.3% excise tax on medical devices would have had an especially detrimental impact on Indiana given the high number of good-paying jobs here that are directly associated with these products. This includes major companies like Cook Medical in Bloomington and Zimmer Biomet in Warsaw, along with many others.

The tax was also viewed as a hindrance to medical innovation. In addition, it would have driven up the cost of medical care and adversely impacted individuals, often senior citizens, with physical ailments.


The Cadillac tax, which was also set to take effect in 2020, is a 40% non-deductible tax on the cost of employer-sponsored health care coverage that exceeds federal government thresholds.

It would have potentially forced a large number of employers to either 1) reduce the value of health care coverage they provide to their employees by raising deductibles, co-pays, out-of-pocket maximums and/or premiums, or 2) pay a substantial tax because the health care coverage they provide to their employees has been deemed “too rich”.


The health insurance tax (HIT), or provider fee, was slated to be assessed on insurers to help pay for the ACA, but ultimately would have been passed along, in the form of increased premiums, to small businesses, middle-income families, seniors and young workers. Over a 10-year period, this tax was projected to increase premiums for individual coverage by an average of $2,150 and family coverage by an average of $5,080.

One health care fee will be extended an additional ten years, to 2029.


The Patient-Centered Outcomes Research Institute (PCORI) Fee, which was established as a part of the Affordable Care Act to fund medical research, was set to expire in 2020. The PCORI fee is funded by insurers and employers with self-insured plans (including level funded plans and HRAs) through an annual fee. Employers who sponsor only fully insured plans do not pay the fee. The bill proposes this fee will be extended until 2029 (with final payments due in 2030).

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