On Wednesday, December 20, the House and Senate passed a U.S. tax bill, sending the bill to President Trump’s desk for signature. Among other tax implications, the bill eliminates the Individual Mandate penalty for not having health insurance beginning in 2019.
As Health e(fx) has previously shared, the tax bill has no direct impact on the Employer Mandate or employer reporting requirements. But employers want to know what this means for them. Is the Employer Mandate next to go? Not likely.
Here’s 3 signs that the Employer Mandate is likely sticking around:
- The IRS has begun assessing Employer Mandate penalties
Within the last six weeks, many employers have received Letter 226-J that proposes an employer shared responsibility payment for each month of non-compliance for the 2015 tax year. However, of those employers who have received a letter, some have assessments of over $13 million in fines. These penalties are intended to help fund the ACA and the associated subsidies.
- The repeal of the Individual Mandate penalty puts more pressure on the states and the Marketplace structure and health care system
With the repeal of the Individual Mandate, the Congressional Budget Office (CBO) estimates that 13 million fewer people will have health insurance coverage by 2027. Average nongroup premiums will increase by 10 percent in most years. While the CBO indicates markets in most areas will remain stable, The Hill reports, the repeal of the Individual Mandate penalty will put more pressure on the states to keep individuals insured and healthcare affordable. Repealing more of the ACA could worsen the situation, and may not be looked upon favorably by some states that are already struggling to get their constituents covered.
- Multiple preceding bill failures in the House and Senate
The Individual Mandate was one of the most unpopular parts of the ACA. With the successful repeal of the mandate, Republicans may feel less pressure to continue the ACA repeal track—particularly after multiple, high-profile repeal bill failures.
In addition, Senate Majority leader Mitch McConnel (R-Ky) has committed to Senator Susan Collins (R-Maine) that he will support the passage of two bills that provide funding to insurers to help stabilize the marketplace and offset some of the impact of the Individual Mandate repeal. While the outlook for the bills is questionable (conservatives don’t approve of the approach), the passing of these measures would help stabilize the market and could help the ACA dig deeper roots and more staying power.
The Employer Mandate, and all its complexity, is in effect and is not changed with the passage of the tax bill. What does that leave employers to do? First and foremost, particularly given recent IRS assessments, employers should be limiting their compliance risk. Active compliance management is key to avoid year-end surprises and IRS assessment letters for 2016, 2017 and future calendar years. Secondly, employers should regularly manage data to ensure accurate data sets to prepare and stay ahead of any future reform at the federal, state or municipal level. Change will continue.
Our technology helps users actively manage their compliance monthly, which removes uncertainty and risk, particularly at the end of the year. Reporting due dates are just around the corner. We’re fully ready for on-time report filing and fulfillment in this no-delay year.