Here’s what a repeal of the Affordable Care Act (ACA) would mean for a big administrative headache imposed on employers by the healthcare reform law.
The question a lot of employers are asking right now: Would a repeal of the ACA mean we can stop complying with the law’s reporting requirements?
The answer: Probably not. It looks like the reporting requirements are here to stay … for a long while.
Here’s the reason: Even though Republicans in Congress just released a bill — The American Health Care Act — that would “repeal and replace” the ACA, the bill wouldn’t kill the Obamacare subsidies that help individuals purchase insurance until 2020.
And since qualifying for a subsidy requires not having been offered employer-sponsored health plan coverage, ACA reporting obligations would have to remain in place for the IRS to determine who’d be eligible for a subsidy and who wouldn’t be — at least through 2020.
But wait … there’s more
At the very latest, employers could kiss the reporting requirements goodbye after 2020, right?
The answer: That doesn’t look like a safe bet either.
The American Health Care Act seeks to replace the ACA’s subsidies with an advanceable, refundable tax credit for those who — once again — don’t receive an offer of employer-sponsored coverage.
That would require some means of continuing to track when employees have and haven’t been offered coverage through their employers. So either the ACA reporting mechanisms will stay in place, some other (but similar) mechanisms will take their place or the GOP’s “repeal and replace” plan will get significantly reworked.
Here’s an excerpt on the GOP’s proposed tax credits from our breakdown of the American Health Care Act:
Beginning in 2020, the bill would wave goodbye to Obamacare’s subsidies that help individuals, who don’t receive an offer of ACA-qualifying coverage from their employer, pay for insurance on the open market.
But the subsidies would be replaced with an advanceable, refundable tax credit for the purchase of state-approved, major medical health insurance.
Under the ACA, individuals’ subsidies are based on their income levels, whereas the GOP plan would base the tax credits mostly on age.
Example:
- An individual under 30 would get a $2,000 credit
- Someone between 30 and 39: $2,500
- Someone between 40 and 49: $3,000
- Someone between 50 and 59: $3,500, and
- Someone over age 60: $4,000.
The credits would rise for a family and be capped at $14,000. The credits would be tied to the Consumer Price Index and grow over time. They’d be available in full to those making $75,000 per year ($150,000 for joint filers). But they’d phase out by $100 for every $1,000 in income higher than those thresholds.
It’s also likely, due to the fact that an individual’s eligibility for a tax credit would be dependent on not receiving an offer of coverage from an employer, that the employer reporting requirements of the ACA would remain intact indefinitely.
Stay tuned.
