What a Wild Ride It's Been
There’s no doubt about it – 2017 has been a wild ride for the Affordable Care Act (ACA). When the year began with the inauguration of Donald Trump, the outlook for the ACA was bleak – inevitable full-scale repeal was all anyone could envision. Then, as the spring and summer unfolded, cracks in the Republican party changed the outlook from full-scale repeal to significant amendment. By late summer, it was down to…let’s fix it until we can think of something better. Then, finally, nothing happened.
Until now. This week, the House and Senate finalized a new tax reform package that included – out of nowhere – a repeal of the ACA’s individual mandate penalty. And now, all I can say is…here we go again.
Well, first, let’s break down what is actually happening:
- Nothing in 2018 – the changes imposed by the tax bill don’t take effect until 2019
- The individual mandate penalty is eliminated beginning on January 1, 2019 (but ironically, the mandate itself is not)
- Subsidies for low-income individuals for both premiums and out-of-pocket expenses will remain in place (and may get enhanced by new bills to be voted on in January 2018)
- The employer mandate is not affected in any way
The most important thing to know is this: for individuals as well as employers, 2018 is no different than 2017. If individuals choose to go without coverage in 2018, there will be penalties applied. Employees may come to you wanting to drop coverage thinking the mandate is gone – that's not the case. Nothing changes until 2019.
So, what’s the future of the ACA now? As with all things ACA, the rhetoric and politics will take center stage going into 2018. We have the Congressional mid-term elections coming up in 2018, and due to how things played out in 2017, the Democrats have at least a slim chance at taking back either the House or Senate (though it’s still unlikely). Should that happen, the agenda of dismantling the ACA will likely hit a brick wall. However, if the Republicans maintain a majority in both houses, I think it's likely that 2019 could see a renewed effort to eliminate major portions of the ACA. We saw how hard that was earlier this year, but it’s still possible. In addition, the various federal agencies are supposed to provide the President with options for association health plans, changes for short-term medical plan rules and more. Those will definitely play a role in how the ACA evolves from here.
So what’s an employer to do now? Hold the course. 2018 promises to be a wild ride as well. As always, stay focused on what actually happens, not all the chatter. We'll continue to keep you up-to-date as we keep speeding down this ACA road together! In the meantime, contact us if you have any questions.
Information contained herein is not intended to constitute tax or legal advice and should not be used for purposes of evading or avoiding otherwise applicable regulatory responsibilities as issued by the federal or state government(s) and/or taxes owed under the Internal Revenue Code. You are encouraged to seek advice from your legal or tax advisor based on your circumstances.
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