Changes to the ACA?
Northwestern Benefit is monitoring legislative, regulatory and judicial developments on a daily basis and will provide updated compliance information as it changes. In addition, we will provide best practices to our clients to guide them through the practical changes they will need to make to navigate the changes.
In the meantime, we will provide compliance guidance on how to meet the current ACA requirements since, for the time being, the law is in effect and being enforced. Below, we have summarized what the President-elect and Congressional leaders have indicated would be priorities with respect to the ACA in 2017 and interpreted those priorities by taking into account the procedural and legal requirements that Congress must follow when changing or repealing legislation.
Important First Steps
We strongly encourage employers to comply with the ACA requirements until new legislation is passed or until the government announces that it will not enforce specific requirements. Keep in mind that several government agencies and departments, including the IRS, DOL and HHS, enforce the ACA. So, for example, while the HHS may decide not to enforce certain provisions, that doesn’t mean that the IRS will refrain from imposing revenue-building taxes and penalties.
While there are few details about how the new administration plans to impact the ACA, President-Elect Trump did publish the following points on his official website that may impact employers:
- Allow the sale of insurance across state lines to encourage competition in the marketplace.
- Repeal the ACA, specifically the individual mandate.
- Expand the use of Health Savings Accounts (HSA).
Likely Changes Based on Past Congressional Action
Outright repeal of the ACA is unlikely because it would require 60 votes to override a Senate filibuster and the Republicans do not have the required votes. However, Senate rules allow a bill to pass with only a simple majority if the bill only relates to spending. This process is called the budget reconciliation process. However, since only provisions related to the budget and spending can be passed this way, this means most of the ACA requirements are unlikely to be repealed.
Last year, Congress did pass several bills to repeal parts of the ACA and those bills give us an insight on what might be included in a budget reconciliation bill in 2017. Some of those items were:
- Repeal the Cadillac Tax
- Repeal the individual mandate
- End premium tax credits for individuals
- Repeal the employer mandate and penalty tax
- Repeal Medicaid expansion
- End small business tax credits
- Delay the effective date until 2018 to give Congress more time to develop a replacement bill.
Two of the items above – the individual and employer mandates – are unlikely to survive a final reconciliation bill because the Senate has determined that they are not appropriate for a budget reconciliation bill under the Senate procedural rules. However, if the penalty tax on the mandates are repealed, then employers and individuals would not be subject to penalties if they did not comply with the mandates.
One interesting twist is that the employer reporting requirement on Form 1095-C would still be in effect and employers would still be subject to penalties for failing to report that they were (or were not) offering coverage.
Even if a budget reconciliation bill that includes the items above passed both the House and Senate and was signed into law by the President, the bill would likely not go into effect until Congress comes up with a way to replace the repealed provisions. That’s because most of the repealed provisions would result in fewer penalties and credits, which means reduced revenue and an increased deficit unless other provisions are enacted to increase revenue or otherwise decrease the deficit. In addition, Congress is unlikely to support a bill that would take away access to health insurance to millions who are covered through state and federal exchanges.
Since it is unlikely that Congress will repeal the entire ACA in the coming months, employers should continue to work with their Northwestern Benefit Consultant to comply with the ACA in 2017. Our team will track developments in the ACA daily and keep you up to date on any developments that impact our clients’ plans.