Repeal, Repair, Replace – or Relax?
There are a lot of questions swirling about the future of PPACA and its impacts on employers and individuals. Will it be repealed? Will it be entirely replaced? Will it just be repaired? When can I just relax? There are five things for employers to keep in mind as the GOP plan for life after ACA comes together.
1. Focused on Individual Market
Congress and POTUS are largely focused on the individual market. The conversation is centered around the potential for increasingly unaffordable premiums in the individual market if the individual mandate, which requires you to maintain insurance or pay a penalty, is eliminated entirely. Lawmakers are structuring plans around dealing with this issue while balancing the desire to ease mandates and still provide assistance in affording coverage for those that need it.
2. Employer Reporting Is Probably Not Going Away
It looks like, in both the short-term and the long-run, employer reporting is going to continue to exist in one form or another. It is likely that the future will see a reduced compliance burden, with employer reporting focused more on who was offered coverage and who elected it – and less on who was of full-time employee status.
3. Good Faith Effort Extended for 2016 Reporting
Even prior to President Trump’s Executive Order for regulators to relax provisions of PPACA wherever possible, the IRS issued notice that they would extend the “Good Faith” relief provided to employers for 2015 reporting to 2016 reporting. That means, for at least this year, employers should stay the course. If you haven’t already mailed out your 1095-Cs, keep working towards the March 2nd deadline for distribution to ensure you can prove you made a Good Faith Effort at compliance.
4. IRS to Allow Blanks on Line 61 of Form 1040
The IRS recently confirmed a change in policy regarding line 61 on individual income tax returns (Form 1040). Line 61 indicates whether the individual had a full-year of qualifying coverage (as required by PPACA). Previously, the IRS had indicated it would automatically reject forms that left this line blank. In keeping with the Executive Order, the IRS has reversed this decision and will continue to process forms where this line is left blank. They did note that individuals are still required to pay the mandate penalty (if applicable). This is not a full repeal of the individual mandate or an outright exemption from the penalty, however, it is one step in the process.
5. Changes Will Take Place over a Long Period
Don’t expect this to be an overnight change. In any of the scenarios (repeal, replace, repair, or even remain), the timeline for compliance changes for employers looks to be in 2018 at the earliest. During this time of continued change, make sure your vendors can keep up. Given the ever-changing nature of the regulations, you will want to be sure your partners can turn on a dime to help you comply and roll with the punches.