Health Reform WK-EDGE Individuals and businesses impacted by filing season developments
Monday, May 1, 2017

Individuals and businesses impacted by filing season developments

By Wolters Kluwer Editorial Staff

In March, Republican leaders in the House pulled the American Health Care Act (H.R. 1628), which would have repealed and replaced the Patient Protection and Affordable Care Act (ACA) (P.L. 111-148) from consideration. As a result, the ACA remains in effect. President Trump has expressed interest in brokering a deal on Capitol Hill on health care before turning to tax reform, but no breakthroughs have been reported at press time.

Individual shared responsibility. In February, the Internal Revenue Service (IRS) announced on its website that it would not reject returns that fail to indicate coverage, an exemption or a shared responsibility payment. This continues a policy the IRS has had in place. Taxpayers may, however, be contacted later, the IRS cautioned.

The ACA generally requires individuals to maintain minimum essential coverage or make a shared responsibility payment, unless exempt. Most employer-provided coverage is minimum essential coverage.

Qualified small business HRAs. The IRS announced in March that small employers will have more time to inform employees about qualified small employer health reimbursement arrangements (QSEHRAs) (Notice 2017-20). The agency extended the initial written notice period until no earlier than 90 days after the IRS issues guidance with respect to the contents of such a notice. Employers that provide written notice earlier may rely on a reasonable good faith interpretation of Internal Revenue Code Sec. 9831(d)(4).

Congress intended QSEHRAs to be a means by which small employers could avoid the premium reimbursement plan ban under the ACA’s market reforms.

ACA repeal and replacement. The American Health Care Act (AHCA), as unveiled in early March 2017, would have repealed the ACA’s taxes, including the net investment income (NII) tax, additional Medicare tax, and the medical device excise tax, among others. The AHCA also would have repealed changes made to the medical expense deduction and would have expanded health savings accounts (HSAs). In place of the Code Sec. 36B premium assistance credit, the AHCA would have created a new advanceable, refundable health care credit.

If not considered this year, legislation to at least change aspects of the ACA are likely due to the marketplace structure in many states, as well as current administrative actions by the Trump Administration, such as tightening the period within which individuals can sign up for full 2018 coverage.

There is still outstanding litigation about the ACA. A federal court has stayed a challenge to the ACA’s cost-sharing reductions (see Court sides with House Republicans, finds no appropriation for cost-sharing reductions, May 18, 2016). Opponents have argued that no funds have been appropriated by the law for the cost-sharing payments to insurers.

This Strategic Perspective is part of a larger Tax Briefing on filing season developments.

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