June 26, 2019

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Budget Deal Addresses Health Benefit Issues

The Congressional agreement that reopened the federal government for three weeks quietly addressed—at least temporarily—several high-profile issues affecting public and private health benefits. Most significantly, the new appropriations act:

  • Delays the effective date of the so-called Cadillac Tax by two years to 2022. This Affordable Care Act (ACA) provision imposes a 40 percent tax on employers for the value of health coverage that they provide above a specified dollar limit. The tax was originally scheduled to take effect this year, but was previously delayed by two years. Employers may take this delay into account in considering plan design changes and collective bargaining negotiations.

  • Delays implementation of the tax on medical devices by two years to 2020.

  • Delays implementation of the tax on health insurers by one year to 2020.

  • Reauthorizes the Children's Health Insurance Program (CHIP) for six years to 2024. CHIP provides health insurance coverage to children in low-income households through programs operated by the states. The program's funding technically expired as of October 1, 2017 (although measures have been taken to keep the program in operation since that time). The Act makes certain other changes to CHIP, as well.

The delay in the three taxes demonstrates how significant changes are being made to the ACA through a piecemeal approach in the wake of the failure by Congress to enact more comprehensive repeal and replace legislation. The temporary nature of these measures ensures that they will reemerge as issues in the future, although not nearly so soon as the need to revisit the federal budget.

Copyright © by Ballard Spahr LLP

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About this Author

Edward I. Leeds, Philadelphia attorney, Ballard Spahr Law firm, Employee Benefits and Executive Compensationattorney
Counsel

Edward I. Leeds concentrates on issues relating to the design, administration, and taxation of health and other welfare benefit plans. His practice has evolved with the laws and market forces that shape those plans. Mr. Leeds advises clients about compliance with the Affordable Care Act, HIPAA, HITECH, COBRA, cafeteria plan rules, and other legal requirements. He prepares clients for audits of their privacy and security measures under HIPAA and advises them about the rules governing wellness initiatives.

Mr. Leeds represents employers in the negotiation and drafting of contracts...

215.864.8419
Laura Heacock, Ballard Spahr Law Firm, Finance, Labor and Employment Attorney
Associate

Laura P. Heacock focuses her practice on all areas of employee benefits and executive compensation. She advises clients on issues relating to the design, administration, and taxation of health and other welfare benefit plans and about compliance with the Affordable Care Act, HIPAA, HITECH, COBRA, cafeteria plan rules, and other legal requirements. Ms. Heacock prepares clients for audits of their privacy and security measures under HIPAA and advises them about the rules governing wellness initiatives, and has experience conducting HIPAA trainings that focus on compliance with various aspects of HIPAA's Privacy and Security Rules.

Ms. Heacock also has experience with incentive and equity-based compensation agreements, change in control agreements, and executive employment and separation agreements. She counsels clients in the design and drafting of stock option plans and has experience in drafting, amending, and terminating tax-qualified defined benefit, defined contribution, and health and welfare plans and preparing related employee communications.

215-864-8864