“Cadillac Tax” on High-Cost Group Health Plans Repealed
On December 20, 2019, the President signed into law the “Further Consolidated Appropriations Act, 2020” (the “Act”). Among many other things, the Act repeals the Affordable Care Act’s controversial 40% excise tax on high-cost health care (commonly referred to as the “Cadillac Tax”). From an economic perspective, the Cadillac Tax was intended to generate tax revenue and drive down utilization of unnecessary health care services. Originally scheduled to become effective in 2018, two separate legislative acts pushed the effective date to 2022. Given the Cadillac Tax’s unpopularity on both sides of the aisle, it seemed that it was only a matter of time before the tax was repealed.
The Act also repealed two other healthcare-related taxes established by the Affordable Care Act – the medical device tax and the tax on health insurance providers. Both of these taxes were also delayed or paused in prior legislation.