ACA Reporting May Be Modified, But Health Care Reform is Not Going Away
It's been a bumpy road for Health Care Reform. Some recent articles on the future of the Affordable Care Act (ACA) have referred to repeal and replace efforts as "Zombiecare." The American Health Care Act (AHCA), withdrawn from a vote on March 29th, seemed to be dead but frequent accounts of its resurrection have led to zombie comparisons (as one article observed "it just won't stay dead"). Other articles compared the replace effort to a vampire since Republicans continue to look for a deal to bring the AHCA back to life. While it is debatable whether the zombie vs. vampire characterization is accurate or even helpful, the Health Care Reform debate is certainly not over. Although ACA reform is clearly still a priority for the Administration and many lawmakers, the ACA remains the law. Employers, therefore, need to continue tracking and consolidating data for compliance with the employer mandate.
How Would the AHCA Impact Employers
The AHCA calls for premium tax credits (subsidies) for people who don't have an offer of coverage from an employer or a government-sponsored plan like Medicaid. But those tax credits wouldn't take effect until 2020. Between now and then, the ACA's premium tax credits would remain in place. Although the AHCA would eliminate the employer mandate penalty retroactively to the beginning of 2016, it wouldn't change anything about the ACA's employer reporting requirements since a reconciliation bill can only address things that directly impact the federal budget.
Much of the current reporting would still be necessary in order for people to receive accurate premium subsidies in the individual market until the end of 2019. That's because individuals are only eligible for the current subsidies if they don't have an offer of affordable, minimum-value coverage from an employer. The IRS relies on employer reporting to determine if a tax filer was offered employer-sponsored coverage, and if so, whether it was affordable and provided minimum value.
What Could Happen After 2019
If the ACA remains in place, things will continue as they are, with the employer mandate and the current reporting requirements, absent guidance from the Internal Revenue Service.
If the AHCA — or similar legislation — is enacted in its current state or amended, there will be changes, but employers will almost certainly still have a role to play. Under the AHCA, employers wouldn't be required to provide coverage to full-time employees or pay a penalty, but they would be involved in the process of determining whether individuals are eligible for the AHCA's premium tax credits.
The AHCA's age-based tax credits would only be available to people who don't have access to government or employer-sponsored coverage. But unlike ACA tax credits, eligibility for AHCA tax credits wouldn't depend on whether the available employer-sponsored coverage was affordable or provided minimum value. Although employers will likely find that maintaining robust, affordable coverage is the best option in terms of providing a competitive benefits package, this information would no longer need to be part of the reporting requirements after 2019.
As such, the House Ways and Means Committee explains that the AHCA would switch to a
"simplified reporting of an offer of coverage on the W-2 by employers," which would replace the ACA's coverage reporting requirements once they're no longer necessary. The IRS would then be able to stop enforcing the ACA's reporting requirements, and employers would switch to reporting coverage offers on employees' W-2s. This could be less burdensome than the ACA's reporting requirements, but would still require employers to track coverage offers in order to ensure accurate data reporting. It is not clear whether reporting would be tracked monthly or if all employers (not just employers with 50 or more full-time and full-time equivalent employees as under the ACA) would need to report. The exact scope of this new reporting requirement would become clear through future regulations and guidance from the IRS.
Potential State-Level Variations
Although the ACA's premium tax credits and employer reporting requirements apply nationwide, states are increasingly considering their own approaches to health care reform. Minnesota has already implemented a state-based premium rebate, and Colorado lawmakers considered a state premium subsidy program during the 2017 legislative session.
The Patient Freedom Act (PFA), another ACA replacement bill introduced in 2017, would allow states flexibility in terms of keeping the ACA or switching to a state-based approach. If the PFA were enacted, employers would potentially be subject to reporting requirements that vary by state. In addition, amendments to the AHCA, in particular recent changes proposed by Representative Tom MacArthur (R-N.J.), also increase the role of states by giving states more flexibility to opt out of major ACA provisions as long as a high-risk pool is available for people with pre-existing conditions.
For the time being, the future of Health Care Reform isn't entirely clear. Employer responsibilities under the ACA might eventually be relaxed, but not entirely eliminated. They may also vary by state. But whether there are significant legislative changes to the ACA in the near future or down the line, employers should understand that reporting requirements will remain in place for the foreseeable future.
ADP is policy neutral and does not take political positions. Our mission is to help clients comply with existing law. Links to articles are not endorsements.
Other articles in this series:
ACA Road to Repeal: What Does Repeal and Replace Really Mean?
ACA Road to Repeal: Executive Order
ACA Road to Repeal: If the ACA Is on Its Way Out, What Comes Next?
ACA Road to Repeal: A State-Based Approach to ACA Replacement
ACA Road to Repeal: Will High-Risk Pools Return?
ACA Road to Repeal: The American Health Care Act
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