You've spent the last several years preparing for, and complying with, the ACA's requirements. But under a Trump administration and a Republican Congress, the future of the ACA is now uncertain.
A Possible Repeal of the ACA
There's a strong consensus that Congress could repeal the spending-related aspects of the ACA, using a filibuster-proof reconciliation bill. The Restoring Americans Healthcare Freedom Reconciliation Act would repeal the ACA and passed the House and Senate in 2015. Though it was vetoed by President Obama, it could serve as a template for a repeal bill enacted under a Trump administration. But repeal legislation could have a substantial delay before it takes effect. According to Politico, Senate Majority Whip John Cornyn has mentioned a potential three-year delay between the legislation to repeal the ACA and the implementation of the replacement legislation — with the ACA remaining in place during the transition.
A Possible Replacement of the ACA
Specifics of the replacement legislation are still unclear. But House Speaker Paul Ryan proposed an outline for reform in June 2016 known as "A Better Way," which has considerable support among Republican lawmakers. The Empowering Patients First Act, one of several repeal and replace bills introduced over the last few years, is another possible template for reform. The legislation, introduced for the third time in 2015 by Republican Rep. Tom Price of Georgia, took on new importance when he was selected to lead the Department of Health and Human Services under the Trump administration.
The Employer Mandate
The Restoring Americans Healthcare Freedom Reconciliation Act would've repealed most spending-related aspects of the ACA after a two-year delay and would've repealed the employer mandate retroactively to the beginning of 2015. None of the major ACA replacement proposals include a requirement that employers offer coverage, and it's fair to assume that the employer mandate — and its informational reporting requirements — may not last long term.
Continue Tracking Data and Filing on Time
But heading into the new year, nothing has changed yet. ACA informational reporting forms for 2016 must be distributed to employees by March 2, 2017 and filed electronically by March 31, 2017, according to the IRS. If paper forms are filed, the deadline is Feb. 28, 2017. Employers should continue to track data for compliance with the employer mandate in 2017 until the law changes.
A Possible Cap on the Tax Exclusion of Premiums
A reconciliation bill to repeal spending-related provisions of the ACA would almost certainly repeal the Cadillac tax, currently set to take effect in 2020. But a common theme in "A Better Way" and the Empowering Patients First Act is a limit on the tax exclusion of health insurance premiums. "A Better Way" doesn't specify a dollar amount, but the Empowering Patients First Act calls for capping the premium tax exclusion at $8,000 in annual premiums for a single employee, and $20,000 for family premiums, indexed for inflation, according to Congress.
For perspective, the average total premium in 2016 was $6,435 for single employees and $18,142 for family coverage, according to the Kaiser Family Foundation. The Society for Human Resource Management notes that the cap on the deductibility of health insurance premiums would be less punitive than the Cadillac tax. Although we don't yet know specifics, finance leaders should expect that the tax exclusion of health insurance premiums may have a cap in future years.
A Possible Revitalization of HRAs and HSAs
"A Better Way" and the Empowering Patients First Act both call for revitalizing HRAs that would allow employers to reimburse employees for health care expenses, including individual market health insurance premiums. Such arrangements are not allowed under IRS interpretation of ACA requirements, according to the IRS. But they could become legal again under future legislation to replace the ACA.
The 21st Century Cures Act — overwhelmingly passed by Congress in 2016 — allows small employers (those with fewer than 50 employees) to reimburse employees for individual market premiums via HRAs. Future legislation could open up similar options for larger organizations. All major proposals to replace the ACA include an increased emphasis on HSAs. If HSA contribution limits are increased, employers would have the opportunity to contribute additional funds to employees' HSAs as part of their overall compensation package.
There's no doubt the future of health care reform is up in the air again, and finance leaders will have a lot to watch for as the Trump administration takes over.
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