What Comes Next for the Federal Budget and Continuing Resolutions?

This post was authored by Dan Colacino, Vice President of Underwriting and Compliance at Rose and Kiernan, Inc.

On Monday, President Trump put the federal government back to work by signing yet another continuing resolution (CR) to fund the government for three weeks.  As is the case with many other CRs, this one was decorated like your family Christmas tree, as both sides took the opportunity (and cover of “getting the government back to work”) to add their special funding needs.

The CR is nothing new and, in fact, there have been times in the past when the budget consisted of a series of CRs.  It obviously doesn’t solve the budget problems and does nothing to address the budget deficit we’re facing since it continues the funding set by the previous budget.

The ornaments on this most recent CR are as follows:

  • Postponement of the 40% excise tax more popularly known as the Cadillac Tax. This universally disliked tax never seems to go away and the answer as to why is simple – in order to repeal this tax, Congress needs to come up with $87 billion to cover the shortfall caused by repealing the tax and no one wants to touch that third rail.
  • The health insurer fee or tax (HIT) has been suspended, again, for 2019. The tax was suspended for 2017 and came back in 2018. It adds anywhere from 2.5% to 5.5% to a health insurance premium, so all employers started 2018 with an increase before health trend was considered.  In next year’s renewal, employers will start out with a decrease, again before trend and claims experience are considered.
  • The medical device tax was also suspended but unlike the HIT, this was a continuation of a suspension so the tax will not be levied in 2018 or 2019.
  • The Children’s Health Insurance Program (CHIP) has had its funding renewed for 6 years.  The lack of funding has been an embarrassment for both sides as this program has universal support and in the long run saves money for both the state and federal government since these kids would rely on Medicaid if not for CHIP.

It’s anyone’s guess what will happen on February 8th when this round of funding ends. It’s a safe bet that any resolution, permanent or continuing will not occur until at least February 7th. The face-off this time is DACA and the border wall. Let’s see who blinks first.

Post a Comment

Your email address will not be published. Required fields are marked *

Related Posts

Looking Forward into 2018: Congressional Policy Updates for Employers to Watch

As Congress ended the 2017 session, there were still a number of important issues left unaddressed. Here’s what we’re anticipating for early 2018.

Read More

What Does the Republican Tax Bill Mean for Employers?

Both chambers of Congress have passed the final version of their tax cut bill. It’s assumed that the President will sign the bill on Friday, and then the Republicans will officially own it. For employers, it’s essential to understand how this tax bill will impact employee benefits.

Read More

How Congress’ Budget Bills Could Impact Employers

Each chamber in Congress has presented their tax cut bills, being euphemistically referred to as tax reform bills – as promised during the 2017 campaign. While much of the discussion in New York State has been about state and local tax deductions, a deeper dive reveals some impacts the two tax bills could have on employee benefits.

Read More