Important Update – No more Cadillac Tax?! Congress has passed their end of year spending bills, collectively known as the Further Consolidated Appropriations Act, 2020, which includes the repeal of the three major taxes of the Affordable Care Act. These taxes include the “Cadillac” tax, the health insurance tax (HIT), and the 2.3% medical device tax.

The “Cadillac” tax is a 40% tax on high cost employer health plans that was delayed (multiple times) to take effect in the year 2022. The tax was supposed to be applied to health plans that cost more than $11,200 a year for individual policies and $30,150 per year for a family policy.

The health insurance tax (HIT) is an annual fee that is charged to health insurance companies. This tax is applied to earned premiums by insurance companies who offer fully-insured health insurance coverage. According to the Business Council of NYS, the tax would add $479 to medical premiums for families with community rated coverage and $458 for families with experience rated coverage. The HIT is scheduled to be eliminated as of January 1, 2021.

The medical device tax is a 2.3% tax on the price that a medical device is sold for. This fee is charged to manufacturers, producers or importers of the medical devices. This tax is scheduled to be eliminated as of January 1, 2020.

In addition, the bill provides an additional 10 years of funding for the Patient-Centered Outcomes Research Institute (PCORI), which is an annual fee that health plans pay annually. The PCORI fee was set to be eliminated for any plan years ending on or after October 1, 2019, but it will now be extended through 2029.

The bills are now on their way to President Trump’s desk for signature, which he is expected to sign.


December 20th, 2019 – This has now been signed into law by President Trump.