The ACA is here to stay: Employers still required to comply
Health care reform has been a continually changing and evolving animal since the passage of the Affordable Care Act (ACA) in 2010, and health care was set to transform yet again. Many Republicans as well as President Trump had promised to repeal and replace the ACA, but they were ultimately unsuccessful.
The ACA weathered the congressional storm, and employers must comply with the ACA for 2017.
The health care reform storm: Where it left us
Last November, after President Trump was elected as President of the United States, the status of the ACA became uncertain. President Trump, like most of his Republican colleagues, promised to repeal and replace the ACA, and the big question became, “what would replace the ACA?”
The House of Representatives put forth the American Health Care Act (AHCA) in early March. This bill passed through the House by a narrow margin in May, and was reworked by the Senate into the Better Care Reconciliation Act (BCRA). This bill faced significant challenges, including conflicts regarding key pieces of the legislation within the Republican Party, Congressional Budget Office scores that projected higher premiums and fewer Americans receiving coverage, and a poor public perception of the bill.
After much debate amongst Republicans, and with pressure being applied by the White House, the Senate took the bill to the floor.
As the chances of passing the legislation in its proposed format began to dwindle, Republicans pushed to pass a “skinny repeal.” This was a major departure from the original plan, but Republican leadership believed if they could pass the “skinny bill,” it could be reconciled in a House conference committee.
The vote for the “skinny bill” dramatically failed in early morning hours of July 28 as Senator John McCain gave a no vote, which ultimately lead to the failure of the Republicans exhaustive repeal and replace efforts.
Congress has since gone on summer recess, but with its return in September, how do we know Republicans won’t continue to push for health care reform?
How we know the ACA is here to stay
While the President and the White House have pushed Congress throughout its recess to keep repeal and replace efforts alive during the next session, Republican leadership has strongly indicated that they will move on to other major legislative agenda items. In the meantime, reports from Washington D.C. reveal that members of Congress have begun working on bipartisan legislation that aims to stabilize the individual markets, essentially acknowledging that the ACA remains the law of the land.
During this wild ride, employers from all over the country looked for guidance on what they should do. Many thought the ACA and, more specifically, the Employer Shared Responsibility Tax (ESRT) provision of the law, were going away. Because of this belief, many employers were inactive in their ACA compliance efforts, thinking they would not need to comply.
However, it’s time for all employers to recognize the reality that they find themselves in, which is that the ACA is here to stay.
The first clear indication that ACA is here to stay for at least the 2017 reporting cycle is the abandonment of repeal and replace efforts by Congress, and their focus on bipartisan legislation to stabilize individual markets.
The 2017 reporting cycle has begun
If you look beyond Congress there are several more clear indications that the 2017 reporting cycle is already underway in a sense.
- In April of this year, the Treasury Inspector General for Tax Administration (TIGTA) released a report indicating notifications letters that identify non-filing employers are being sent out. This is the first step to implementing the collection of significant penalties that are prescribed under the law for non-compliant employers. The IRS expects to collect $228 billion worth of ACA penalties.
- The IRS recently released draft reporting forms for the 2017 reporting year. This includes 2017 1094 and 1095 B and C series forms. Previously, these forms were released later in the year, when the deadline to comply was eventually extended. The IRS has also released updated business schemas and rules for the e-filing portal (AIR program) and is permitting e-filers to begin testing 2017 transmissions.
- Finally, the IRS has issued Notice 2017-0013. This is an IRS response to request for waiver of ESRT penalties and requirements by large employers that failed to file in previous years. What’s most interesting about this notice is that it directly addresses President Trump’s Executive Order from January, where he directed governmental agencies to alleviate the burden of the ACA on individuals and employers where they see fit. The notice states:
“The recent Executive Order Minimizing the Economic Burden of the Patient Protection and Affordable Care Act Pending Repeal (January 20, 2017), directed federal agencies to exercise authority and discretion permitted to them by law to reduce potential burden imposed by the ACA. The Executive Order does not change the law; the legislative provisions of the ACA are still in force until changed by the Congress, and taxpayers remain required to follow the law and pay what they may owe.”
As you can see, there are more than ample indications that the ACA is alive and well. There are no signs of some extra-ordinary relief being provided as the IRS gears up for the 2017 reporting year.
Employers must recognize this and take actions to reduce or minimize their risk of penalties stemming from non-compliance, including continuing year-round ACA tracking. This may not be the reality that employers were hoping for, but it’s time for them to start taking action!