With ACA individual mandate gone in GOP tax accord, employer groups plot next steps

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The sweeping tax overhaul up for final passage in Congress this week doesn’t make any changes in healthcare rules or taxes for employees, but its repeal of the requirement that all individuals carry health insurance could result in higher premiums.

To prevent market destabilization and the estimated 10% hikes that officials believe will be the result of individuals fleeing the health insurance marketplace, employer and business groups are turning their attention to other bills that could ease the disruption.

They are also hoping to win repeal of the Affordable Care Act’s so-called Cadillac tax, a 40% surcharge scheduled to take effect in 2020 on the most expensive employer-sponsored health insurance plans, as well as all the “pay or play” requirement on businesses.

A new bill by Republican Reps. Mike Kelly of Pennsylvania and Devin Nunes of California would provide some relief by delaying both.

American Benefits Council President James Klein called the legislation a “helpful step,” and said his group looks “forward to working with them to enact legislation fully repealing the harmful 40% ‘Cadillac tax’ and the burdensome employer mandate.

“As we noted in our Dec. 8 letter to Congress, if tax reform legislation repeals ACA’s individual mandate penalties — as it seems poised to do — it is essential that it also provide relief from the employer mandate penalties,” Klein said. “Employers are already receiving enforcement notices from the IRS, requiring employers to review complex reporting and respond within extremely short deadlines, making relief an urgent necessity.”

Also see: "How the GOP tax bill could affect small business 401(k)s."

Klein said that with the instability in the individual insurance market, “it is crucial that lawmakers protect the employer-sponsored system covering more than 178 million Americans.”

They will also be pushing for passage of other measures to help minimize the expected fallout from the individual mandate repeal, including a bipartisan health reform bill by Sens. Patty Murray (D-Wash.) and Lamar Alexander (R-Tenn.) that would fund for two years the subsidies that reduce costs for low income individuals.

The administration has cut off making those payments because they never were explicitly appropriated by Congress.

Although the Congressional Budget Office has said the resumption of those subsidies would do little to change the number of individuals who have insurance, Klein says it will help, and that it and other steps will be need to be taken quickly to minimize disruption to the marketplace if the tax bill passes.

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