ACA: What’s next?
November 29, 2016
By Tracey Lueken-Burds, Director of Client Services
Americans are wondering what the incoming Republican administration will mean for President Obama’s flagship legislation, the Affordable Care Act (ACA). President-elect Donald Trump and many of his fellow Republicans have vowed to repeal and replace the current law, and with control of both Congressional chambers and of the White House, they are closer to their goal than ever before. However, repealing and replacing the ACA will be easier said than done.
The Republicans do not have the supermajority in the Senate they would need to repeal the law entirely, but they can still make limited changes through a legislative process called reconciliation. This allows certain matters to be expedited by forbidding a filibuster, but it is limited to certain tax, spending and budget measures. Penalties assessed under the health insurance mandates for individuals and large employers as well as tax subsidies provided to fund insurance exchanges could all be eliminated through reconciliation. However, this legislative process cannot change the market reform provisions of the ACA.
Another hurdle for the repeal-and-replace approach is that Republicans would need to unite behind a replacement plan, and there are philosophical differences between party members that need to be overcome. Trump has also expressed interest in maintaining certain provisions, such as those that allow children under the age of 26 to remain covered under a parent’s plan and those that bar insurance providers from rejecting coverage based on pre-existing conditions.
It took the Democrats decades to pass the ACA and years to implement, so change in the other direction is likely to be a slow process as well.
Despite speculation about upcoming changes, employers must still comply with current law and work with what we know. To do otherwise would be an enormous risk. That means applicable large employers (ALEs) should continue to file informational returns using Form 1094-C and 1095-C.
On November 18, 2016, the IRS released Notice 2016-70, extending the due date for ALEs to furnish Form 1095-C to their full-time employees from January 31, 2017, to March 2, 2017. The notice also clarified that taxpayers may rely on other information received from their employer or coverage provider for purposes of filing their tax return and do not need to wait to receive their 1095 before filing a return. The good-faith transition relief from 2015 is also being extended for the 2016 reporting year, which means that ALEs will not be penalized for incorrect or incomplete 1095-Cs so long as they can demonstrate a good-faith effort to comply with the requirements.
HKP will be keeping an eye on developments as the new administration takes shape and takes action. In the meantime, continue complying with the requirements as they exist today.