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Congress repeals three Affordable Care Act (ACA) Taxes

On December 19, the Senate passed two spending bills to fund the government through September 30, 2020, one of which (HR 1865, the “Further Consolidated Appropriations Act of 2020” or the “Act”). The House has already passed these bills and the President is expected to sign them.

The Act includes a number of health provisions of interest to employers and service providers. Among other things, it repeals three tax provisions from the ACA including:

  • The Cadillac Tax. The year-end bill would repeal the excise tax on high-cost employer-sponsored health coverage (i.e., the “Cadillac” tax) effective for taxable years beginning after December 31, 2019. NAPEO has supported the repeal of the Cadillac tax since 2015.
  • The Annual Fee on Health Insurance Providers. The year-end bill would repeal the annual fee imposed on health insurance providers under section 9010 of the ACA effective for calendar years beginning after December 31, 2020; and,
  • The Medical Device Tax. The year-end bill would repeal the 2.3% medical device tax that was enacted as part of the Health Care and Education Reconciliation Act of 2010, effective for sales after December 31, 2019.

NAPEO and the Affordable Care Act (ACA)

In 2010, NAPEO was successful in having a statement read on the Senate floor clarifying that the application of small business tax credits, employer mandates, and non-discrimination testing should be at the PEO client level. This was accomplished through a Senate colloquy between Senators Nelson (D-FL), Baucus (D-MT), and Grassley (R-IA) which explained the Congressional intent of the ACA in specific PEO situations.

Moving forward, NAPEO believes that Congress should focus attention toward easing the cost and compliance burdens associated with the ACA. There are numerous bipartisan bills before Congress that could bring relief from the regulatory burdens of the ACA. That is why NAPEO is supporting legislation to change the definition of full-time employment in the ACA from 30 hours per week to 40 hours per week, as well as legislation to repeal the 40 percent excise tax on employer-provided health insurance. These proposals will help ease the burden of ACA compliance and make health insurance more affordable for the employees of small and mid-sized companies.

Go to ACA Resources for PEOs