President Obama recently signed the Consolidated Appropriations Act of 2016, which (among other things) provides a two-year delay of the Affordable Care Act’s excise tax on high-cost employer-sponsored health coverage (commonly referred to as the “cadillac tax” and governed by Internal Revenue Code section 4980I) and imposes a moratorium on the medical device excise tax.
Cadillac Tax Delay
Prior to the delay, the 40% tax was set to take effect in 2018 and would generally be imposed on plans that cost more than $10,200 (for self-only coverage) and $27,500 (for family coverage). As a result of the new law, this tax will not be effective until 2020.
Medical Device Excise Tax Moratorium
The 2.3% medical device excise tax that manufacturers and importers pay on sales of certain medical devices has generally been effective since January 1, 2013. As a result of the new law, this tax will not apply to sales during calendar years 2016 and 2017.
For more details, please review the new law in its entirety.