For employers, lack of ACA changes in tax proposal signals healthcare stability
The absence of any attempt to repeal Affordable Care Act provisions through the Republican tax bill unveiled on Thursday may spell stability – at least in the short term – for healthcare policy, but employer and benefit groups are still hoping to win relief from health insurance taxes sooner rather than later.
Katy Spangler, senior vice president of health policy for the American Benefits Council, said the failure of Republican leaders to include President Donald Trump’s proposed repeal of the mandate that all individuals carry health insurance indicates “there are still some pretty deep scars” and congressional leaders are “over talking about” repealing and replacing Obamacare for awhile.
Granted, that should spell good news for employers, as most business, insurance and benefits groups said that removing the individual mandate – a key provision of the ACA – would cause instability in the health insurance marketplace and shift costs to employers and other stable health insurance customers.
The bad news for employers is the absence of any provisions to delay or reduce taxes on health insurance policies, including the so-called Cadillac tax, a 40% surcharge scheduled to take effect in 2020 on the most expensive employer-sponsored health insurance plans, and the current across the board 3% tax on policies.
The bill, however, is still in its early stages. House Ways and Means Committee Chairman Kevin Brady, R-Texas, told Bloomberg News he could have rewrites before the bill’s first hearing in his committee on Monday.
Spangler said her group will continue working hard to repeal the health insurance taxes.
“Employers make their benefits decisions 18 to 24 months in advance,” she said, “so even though it doesn’t take effect until 2020, we can’t just wait until December of 2019 and think the delay would have the same effect. So there is a sense of urgency.”
Another possible vehicle for winning that tax relief, she said, would be in an end-of-year government funding package like the bill that was used in 2015 to extend the original implementation date from 2018 to 2020.
And even though it appears that repeal and replace is slumbering, there is still a lot for employers to keep up with, Spangler said.
For instance, she said, the administration recently released question and answer documents related to penalties for employers that have failed to comply with mandates for covering their employees, indicating notices for penalties covering 2015 are “imminent."
Likewise, she said, the administration has signaled it may make changes in rules governing which companies can use healthcare reimbursement accounts in lieu of traditional insurance coverage.