With a multitude of changes to the leadership of the government quickly approaching, there could be significant tax changes in 2017. Three key post-election possibilities are reforms to the Affordable Care Act (ACA), retirement plans and the economy.

1. ACA Reforms

The full impact of the ACA is just now being experienced. For example, applicable large employers must offer qualified coverage to 95 percent of all full-time or full-time equivalent employees, according to the IRS. Additionally, the IRS has started enforcing the provisions of the ACA. It's expected that in early 2017 the IRS will be issuing penalty notices for 4980H reporting completed for the 2015 calendar year. Of course, a major component of the ACA — the Cadillac tax and its effects — will not occur until 2020.

The ACA could be repealed and replaced, but the driving question is whether the full ACA will be repealed or if only parts will be repealed. Additionally, will all or part of the ACA be repealed before a replacement is put into effect? According to the Department of Health and Human Services, 20 million individuals rely on health coverage provided through the marketplace, through Medicaid expansion and through continued coverage until age 26.

ACA issues that could arise in 2017 include:

  • Will the individual mandate be suspended or repealed?
  • Will employer reporting be repealed or simplified?
  • What elements will "replacement" include?
  • Will the Cadillac tax be repealed and replaced as well?

2. Retirement Reforms

Additional proposed tax changes in 2017 could also impact retirement plans. Approximately one-third of Americans have no retirement money saved, and 23 percent of Americans have less than $10,000 saved, according to Time Magazine. Longstanding proposed federal legislation has already been circulating requiring approximately all employers to offer some type of retirement plan, thus encouraging retirement readiness.

Some states have proposed legislation requiring certain employers to provide state-based retirement plan options to employees not already covered by an employer-sponsored retirement plan, including part-time, contingent and seasonal employees. Although the states would administer these additional options, thus relieving employers from certain administrative and managerial portions of the plans, employers would still handle payroll withdrawals, submit such withdrawals to the applicable state and provide required disclosures to eligible employees. As such, employers should stay tuned to state legislative environments in the coming year.

3. Economic Reforms

The economy is another key area that will be impacted by tax changes in 2017. Comprehensive tax reform could be highly likely in 2017. Such reform, which may overlap with ACA and retirement plan reforms, could include tax treatment caps on certain employer-sponsored health benefits, improving the taxability upon certain limits for employee and employer retirement plan contributions, expanding the use of health spending accounts, including HSAs, health reimbursement accounts and FSAs, revising W-2 reporting for certain benefits (such as wellness benefits) and repealing and replacing the Cadillac tax. Additionally, new individual tax relief and corporate tax relief has been proposed. Finally, Social Security and Medicare tax reform may take shape in 2017.

Until any of the above legislative changes occur, employers must comply with the law as it currently exists. As new legislative changes become effective, the enforcement measures may change. Thus, compliance is crucial for employers, whether now or down the line further into 2017.

Tags: legislation