IMA Compliance Alert

Law to Reopen Government Includes Heath Care Changes

January 23, 2018

After the federal government was shut down for three days due to an impasse in the Senate, a resolution was finally reached to fund the government another three weeks through February 8, 2018.

The Senate approved it 81-18, the House approved it 266-150, and the President signed it into law.

The new law not only reopens the government but also provides:

• 6 years of additional funding for the Children’s Health Insurance Program (CHIP)
  • This program covering 9 million children is now funded through September 30, 2023
  • Note all employers with health coverage must provide employees an annual CHIP notice
• 2-year delay until 2022 of the §4980I “Cadillac” tax on high cost employer plans
  • This 40% tax was supposed to be effective 2013 but was delayed to 2018
  • Congress passed another law in December 2015 to delay it two more years to 2020 and to recharacterize it from non-deductible to tax deductible
  • Congress has now delayed it another two years to 2022
  • When it takes effect, all health plans regardless of employer size will have to comply, and the recent tax reform law from last month will have the thresholds that trigger this tax index to a slower moving chained inflation rate (meaning more and more employers will hit the thresholds triggering reporting and payment of the 40% tax each year)
• 2-year extension of the moratorium on the medical device tax for 2018 and 2019
  • This tax on medical devices was recently on a 2-year moratorium for 2016 and 2017
  • Now this moratorium continues for 2018 and 2019, so the tax doesn’t resume until 2020
  • This tax increases the cost of health care for health plans and health care consumers
• 1 additional year suspension of the health insurance providers fee in 2019
  • This fee paid by large health, dental, and vision insurance companies since 2014 was recently on a 1-year moratorium for 2017
  • It resumed January 1, 2018, but note this fee is non-deductible, so insurance companies actually have to collect some $20 billion from employers this year in order to pay income tax on what they collect and still have enough left to pay this $14.3 billion fee for 2018
  • This fee will get another 1-year moratorium for 2019 and resume in 2020