The ACA Excise Tax is Delayed Until 2020. Now What?

It’s a done deal! Federal spending legislation cleared by Congress today for the President’s expected signature contains a two-year delay of the excise tax on high-cost plans. Assuming the tax does go into effect in 2020, the cost threshold will be the same indexed amounts they would have been without the delay. However, the U.S. Comptroller General will conduct a study on appropriate age and gender adjustments in consultation with NAIC.

So what does the delay mean for employers? The 2020 effective date provides “breathing room” for employers to thoughtfully plan for avoiding excise tax exposure. It’s true that there is broad support for repeal of the excise tax in Congress and many think this delay gets us one step closer to repeal. But it’s also true that if the provision is not repealed, employers that don’t prepare for it will face with tough decisions about cutting benefits to bring cost below the tax threshold.

Our research shows that more than a third of all employers currently offer a plan that is on track to trigger the tax in 2020. That’s an indication that -- with or without the excise tax -- employers still need to manage health care costs, improve quality, and engage employees to be better consumers and more accountable for their own health.

So take this extra time to consider leveraging a wide range of proven strategies, including consumer-directed health plans, total health management, and health innovations. Mercer’s latest survey found that about a fourth of employers are considering moving to a private exchange within five years. Our own exchange, Mercer Marketplace, has helped clients to not only reduce their costs but also to engage their employees in making better health care decisions with insightful education, broader health improvement solutions, and better decision-support tools.

And, just as a quick reminder, the ACA reporting deadline is fast approaching. But don’t let that stop you from celebrating this piece of good news. I know I am!

Tracy Watts
by Tracy Watts

Senior Partner, National Leader for U.S. Health Policy

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