ACA Compliance Changes
ACA Compliance Changes: New State Laws and Actions
When the Affordable Care Act (ACA), nicknamed Obamacare, was signed into law on March 23, 2010, it represented the U.S. healthcare system's most significant regulatory overhaul since the passage of Medicare and Medicaid in 1965. Even though the ACA has grown in strength over the years and IRS has taken significant steps towards its enforcement, President Trump’s administration continues to modify the ACA through executive actions. Here is a summary of a recent developments under the ACA regulations.
Cadillac Tax Repeal Supported in the House
The House of Representatives recently voted in support of a bill that would permanently repeal the “Cadillac tax” provision in the ACA. The excise tax would add an additional 40% charge on high-cost healthcare plans, which were originally set at $10,200 for single coverage and $27,500 for family coverage. While the provision was originally intended to take effect in January 2018, it has been twice delayed and is now set for 2022. The bill will next be considered by the Senate, and if passed in the Senate the legislation will be presented to President Trump for signature. The nonpartisan Congressional Budget Office estimates that the repealing the tax would cost more than $190 billion between 2022 and 2032.
Judicial Invalidation of the ACA
In yet another unexpected twist in litigation over the constitutionality of the ACA, the Department of Justice (DOJ) took position that the ACA should be invalidated. It now agrees with a December 2018 decision—where a district court declared the entire ACA to be unconstitutional because the Individual Mandate that requires Americans to purchase health insurance has been made invalid because of the Tax Cuts and Jobs Act of 2017 passed by Congress, which lowered the penalty to $0 for not purchasing insurance, starting this year. An appeal of that federal court ruling was heard by the 5th U.S. Circuit Court of Appeals on July 9. Until a final ruling is determined, the ACA remains in effect and the Department of Health and Human Services (HHS) has confirmed that it will continue administering and enforcing all aspects of the ACA.
Meanwhile, IRS Stepping up ACA Enforcement
The IRS has already completed sending its Letter 226J penalty notices to employers for the 2016 tax year. It has now quickly moved on to starting to send penalty notices for the 2017 tax year. This sense of urgency implies that despite the uncertainty, ACA compliance is still very much alive and ignoring it can prove to be extremely expensive. If you haven’t been taking enforcement of the ACA seriously, it’s time to act immediately.
We, at Davidow Financial & Insurance Services, Inc., are watching the Cadillac tax legislation and the ACA court appeal decision closely, and we will continue to share important updates. Continue watching our newsletters for updates.