October 22, 2019

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Congress Delays the “Cadillac Tax” and Other ACA-Related Taxes and Fees

On January 22, 2018 Congress passed (and the President signed) the Federal Register Printing Savings Act(the “Act”), which temporarily (until February 8, 2018) continued funding federal government activity and appropriates funds to various health-related programs (e.g., the Children’s Health Insurance Program, Medicaid, and childhood obesity programs).  In addition to providing for appropriations, the Act also addressed the following taxes and fees established under the Affordable Care Act (“ACA”):

  • The effective date for the controversial 40% excise tax on high-cost health care (commonly referred to as the “Cadillac Tax”) was delayed until 2022.  The Cadillac Tax was originally scheduled to become effective in 2018, but in 2015 it was delayed (also in connection with budget legislation) until 2020.  At a minimum, the new two-year delay gives employers and plan sponsors more time to adjust health plan design to avoid the Cadillac Tax.  However, whether the Cadillac Tax ever becomes effective is certainly in doubt, as the tax is unpopular on both sides of the aisle.

  • A new moratorium on assessment and collection of the fee imposed on health insurers under Section 9010 of the ACA will be applied to 2019.  The fee, which was also subject to a moratorium in 2017, will still be assessed and collected for 2018.

  • The moratorium on application of the 2.3% tax on medical device sales was extended through 2019.  Absent future legislation extending the moratorium or repealing the tax, it will become effective on January 1, 2020.

The three taxes and fees described above were also targeted by the failed attempts at health care reform in 2017 (i.e., the American Health Care Act and the Better Care Reconciliation Act).  Those legislative attempts at health care reform also included delays or repeals of many other revenue-related provisions of the ACA.  As noted above, the Act only funds the federal government until February 8, 2018, so additional budget legislation will be considered by Congress soon.  It is possible that this future budget legislation will target other ACA-related provisions.

© 2019 Proskauer Rose LLP.


About this Author

Damian A Myers Labor and employment law attorney proskauer rose
Senior Counsel

Damian Myers is an Associate in the Employee Benefits, Executive Compensation and ERISA Litigation Practice Center, resident in the Washington, DC office.

Damian represents public and private companies on matters related to employee benefits and executive compensation including compliance with ERISA, tax, corporate and securities laws and regulations affecting employee benefit plans, programs and arrangements. He concentrates on all aspects of compensation and employee benefit programs, including the design, implementation, administration and funding of non-qualified retirement...


Cristopher Jones is an associate in the Labor & Employment Law Department and a member of the Employee Benefits & Executive Compensation Group. He advises clients of all sizes on the design and administration of retirement, health care, employee compensation, and wellness arrangements. Cristopher also counsels employee benefit plan administrators and trustees concerning their fiduciary obligations under ERISA.

Additionally, Cristopher advises public and private companies on employee benefits issues related to mergers, acquisitions, and debt offerings. He also helps employers, benefit plans and healthcare companies comply with HIPAA’s privacy, security, and breach notification rules.