On Monday, the House Ways and Means Committee and the Energy and Commerce Committee released proposed legislation for the repeal and replacement of portions of PPACA (the Patient Protection and Affordable Care Act, i.e. “Obamacare.”). Not surprisingly, it has caused a large amount of “interest”
The proposed legislation includes a variety of changes ranging from repealing portions of PPACA to adjusting existing legislation. One of the focal points involves reducing to zero the penalty associated with the employer mandate – the mandate that requires Applicable Large Employers (“ALEs”) to offer minimum essential coverage that is minimum value and affordable to full-time employees or face potential tax penalties. If passed as is, the repeal of the employer mandate would be retroactive to 2016, which would mean the potential penalties for employers who failed to offer coverage during 2016 (i.e., last year) would be zero dollars.
Our Recommendation: Do not abandon tracking efforts. The reporting requirements have not been repealed and the proposed legislation does not repeal them. The proposed legislation reduces the potential penalty for not meeting the employer mandate to zero. The proposed legislation does not provide relief from penalties (imposed under §§ 6721 and 6722 of the Code) for failing to report under §§ 6055 and 6056 of the Code (i.e. furnishing and filing Forms 1094-B/C and 1095-B/C). We recommend that employers continue to follow the reporting rules and requirements under current law.
The proposed legislation also reduces to zero the penalty associated with the individual mandate. If passed as is, the repeal of the individual mandate would be retroactive to 2016, which would mean that individuals who were not covered during 2016 (i.e., last year) would be subject to penalties of zero dollars.
Caution: Do not rely on this proposed legislation just yet. Think of it as a starting point. Remember, there are other ideas and versions of proposed legislation circulating. See: House Speaker Ryan’s Plan: A Better Way and the leaked House Republican discussion draft. In addition, the Health Savings Act of 2017 has already been introduced in both the House and the Senate.
For now, sit tight. PPACA is still the law. The one thing we can be sure of is that whatever is proposed today (or even tomorrow) will be changed before anything is passed. What we do not know is how (e.g., additions, deletions, clarifications, carve outs, etc.) or when.
The mark-up session for the proposed legislation is scheduled for today, Wednesday March 8, 2017, and we expect to see changes beginning immediately. We will keep you apprised.
If you have any questions in the meantime, or if we can be any assistance, please feel free to contact us.