aca taxes delayed

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With the 2-year delay of the “Cadillac Tax” getting the lion’s share of the publicity surrounding the passage of last month’s omnibus spending bill in Congress, two additional important Affordable Care Act (ACA) taxes were also delayed with little fanfare.

The Health Insurance Tax (HIT) was suspended for one year to 2017. The HIT is a tax on health insurance carriers in the form of a per subscriber, fixed-dollar fee that insurers pay into based on their premiums written. While this tax doesn’t directly impact employers, it has been widely speculated that most insurers would pass most if not all of the cost of the HIT onto their customers in the form of rate hikes, benefit reductions and co-payment increases. The suspension of the HIT provides an estimated 2.5-3% savings on fully insured insurance premiums.

Also delayed for two years, is the implantation of the tax on medical device manufacturers. This is a 2.3% tax on revenue from medical device sales. This tax was poised to deal a significant blow to the medical device manufacturing industry as it dug into money otherwise spent on research and development and would likely result in steeper prices for life-saving medical devices.

It is important that employers know these taxes exist and that they have been delayed. While they may not impact most businesses directly, their cost will almost certainly be passed on to businesses and consumers in some fashion when implemented.