Benefits Buzz

Spending Bill Delays ACA Taxes, Increases Transit Reimbursement Limits

Posted on December 23rd, 2015

You may have heard that President Obama recently signed into law the Consolidated Appropriations Act of 2016, a $1.1 trillion spending bill, avoiding a shutdown and funding the federal government through September 30, 2016. The President also signed the Protecting Americans from Tax Hikes (PATH) Act of 2015 which provides nearly $700 billion in tax breaks. Here’s what it means to the Affordable Care Act (ACA) and transit reimbursement plans.   
 
Cadillac Tax
  • The Cadillac Tax has been delayed by two years until 2020.
  • The Cadillac Tax will be a deductible expense for employers who are subject to paying the tax once it becomes effective.
  • More research is to be conducted on how to adjust the thresholds which trigger the tax for employers who have health plans with age and gender characteristics that differ from the national averages.
 
Medical Device Tax
  • The 2.3% excise tax will be suspended for 2016 and 2017.
 
Health Insurer Tax (HIT)
  • One year suspension of the HIT in 2017, an estimated $13.9 billion in savings to insurers.  
  • The HIT has typically been passed down by insurers to employers and individuals in the form of higher premiums. That pass down would not be applicable in 2017 helping to keep premiums lower. 
 
Transit Reimbursement
  • Creates a permanent fix to allow the maximum transit reimbursement limit to be equal to that of the parking reimbursement limit ($255/mo in 2016).
  • This fix is retroactive for 2015. More guidance is expected to be issued on how employers can make the retroactive adjustment. 
 
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The materials contained within this communication are provided for informational purposes only and do not constitute legal or tax advice.
 

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