As one of the nation's leading providers of payroll services and benefits administration, we believe it is our responsibility to keep clients up-to-date on where we are with the Affordable Care Act (ACA) and its related compliance issues. Things are moving quickly as Congress focuses its attention on repealing and replacing former President Barack Obama's landmark legislation before adjourning for the summer.
So where do we stand with ACA compliance? What are employer obligations at this point, and what will they be in the future? Unfortunately, those questions are not as easy to answer as they are to ask. There are a lot of moving parts to consider as we attempt to navigate what is becoming more complex by the day.
2016 Obligations Still the Same
One thing we can count on is that employer obligations for 2016 have not changed. That means employers will still have to file their paperwork to demonstrate compliance from last year. They will still have to be able to show that the health insurance plans offered to their employees qualified under the rules of the law.
From the individual's perspective, the mandate to have health insurance is still in effect despite one of the first executive orders signed by the new president directing federal agencies to scale back enforcement of the ACA. This is causing both confusion among taxpayers and division among professional tax preparers who now have decisions to make.
As an example, the IRS announced in the wake of President Trump's order that they would not automatically reject individual tax returns with line 61 (the line used to report individual ACA compliance) left unanswered. Some taxpayers will take advantage of that by simply not reporting whether they had health insurance last year. Others will answer the question anyway. Regardless of the decision made, the penalty for not having health insurance is still in effect should the IRS decide to enforce it.
The general belief is that the IRS does not have the resources to go after individual taxpayers who refuse to answer the health insurance question. But they could, so there is always a risk. Similar circumstances exist for companies relating to their mandate for providing health insurance, though they have considerably less wiggle room than the average taxpayer.
What the Future Holds
In the run-up to last November, the Republican-controlled Congress was all about a full repeal of the ACA followed by a replacement bill. That has turned out to be politically troublesome, though. Right now, it looks like the eventual result will be more of a repair than a full repeal and replacement. That could mean lots of different things for employers.
Confusion will still be the norm in many aspects of health insurance, especially the mandate. The current Republican proposal does not call for elimination of the mandate as media outlets have reported because budgeting rules prevent it. What it does is reduce the penalty to zero, effectively eliminating it for most businesses and individual taxpayers.
It is apparent that no definitive changes to the ACA will be implemented this year. Should Congress and the White House find a way to come up with a bill that can pass both houses and earn the president's signature, any changes will be delayed until the start of 2018. That means ACA compliance will continue as normal for 2017.
BenefitMall offers ACA compliance services in addition to payroll processing and benefits administration. If ACA compliance is giving you a headache – and you wouldn't be alone – we urge you to contact us for more information about how we can help.