Archived Insight | December 16, 2015

Spending Deal Delays ACA’s 40% Excise Tax on High-Cost Plans

In the early hours of December 16, 2015, Congressional negotiators reached an agreement on legislation to fund the federal government through September 2016 and to extend certain expiring tax provisions. Included in this deal are three provisions affecting the Affordable Care Act’s 40 percent excise tax on high-cost health plans, most notably a two-year delay.

This excise tax is paid when the total cost of coverage exceeds a certain threshold ($27,500 for all coverage under a multiemployer plan). The tax is paid on the amount by which the total cost of coverage exceeds this threshold.

The legislation (1) delays the effective date by two years, from 2018 to 2020; (2) makes the excise tax deductible by businesses; and (3) calls for a study to determine how best to determine the age and gender adjustment that can result in an increase in the base threshold. The House is expected to vote as early as December 17, and the Senate will vote soon thereafter.

The two-year delay gives Congress more time to devise a longer-term solution to the excise tax, including potentially amendment or repeal.

Questions about the topic?

We're here to help. Get in touch. 

Speak with Us

See more insights

Teacher In Classroom Points To Student Raising Hand

Webinar: How Do State Employee Health Benefits Compare?

See how your state employee health benefits compare to your peers. Our May 1 webinar features insights on health plans in all 50 states.
A Man In His 50S Is Holding Pill Bottles While Searching For Information Online

Guidance Clarifies RDS and Creditable Coverage Calculation

Sponsors of retiree health plans: Learn key aspects on how the CMS final guidance on changes to Medicare Part D prescription drug program impacts you.
Smiling Crossing Guard Helps Students Safely Cross Street

Segal Unveils 2024 State Employee Health Benefit Study and Interactive Plan Map

The study reveals health benefits available to full-time active employees enrolled in state benefit plans in all 50 states for 2023-2024.

This page is for informational purposes only and does not constitute legal, tax or investment advice. You are encouraged to discuss the issues raised here with your legal, tax and other advisors before determining how the issues apply to your specific situations.