American Health Care Act Moves Forward, Carrying With It Reporting Requirements

May 10, 2017 Tom Hospod

Regulatory analysis: A group of Republican Senators is drafting its own health care legislation, “incorporating” some provisions of the House plan. In all likelihood, the Senate version will be drastically different from the House bill. Under the amended American Health Care Act, information reporting requirements remain intact for the immediate and likely the distant future, as the bill maintains and could potentially expand these obligations. More than a month after it was pulled from a vote, the AHCA passed the House of Representatives by a very close margin in a 217 to 213 margin. The bill’s success in the House was due in part to amendments intended to placate the concerns of moderates and Freedom Caucus members. The amendments, offered by Representatives MacArthur and Upton, were primarily focused on rectifying fiscal and marketplace shortcomings of the original bill.

Reporting Requirements Under the AHCA

Although the AHCA makes significant substantive modifications to the laws regulating health care markets, the same cannot be said of the information reporting requirements relative to insurance coverage. If this bill becomes law, the IRS would expect employers to report as it did under the ACA. The IRS would also continue to enforce penalties for late, missing, inaccurate and incomplete information returns. Even with the bill’s nullification of Employer Mandate penalties, reporting would remain mandatory in its current form until 2020 – at which point it would be likely be simplified and incorporated into Form W-2. While the state waiver provisions invite the opportunity for the federal government to relax reporting requirements, they also increase the potential for new reporting requirements at the state level. In fact, there are provisions of the AHCA that would result in new and expanded federal reporting requirements. The health insurance coverage credit creates a new section of the Internal Revenue Code, which would entail extensive information reporting from employers and other insurance providers for the administration of these tax credits. In addition, under the advance payment program, employers will be required to report whether employees qualify for “other specified coverage” in connection with their employment. Such coverage would include coverage under an employer-provided group health plan, Medicare, Medicaid, the Children’s Health Insurance Program, or other government-sponsored programs.

The Amended American Health Care Act

The bill that passed the House last week built largely upon the prior version, but made certain adjustments providing individual states more flexibility in shaping and regulating their own insurance markets. The new bill also appropriates $8 billion over five years to subsidize coverage for pre-existing conditions in an attempt to offset the fiscal impacts of permitting the states to set lower coverage standards. Although the compromises garnered enough votes for the amended AHCA to pass the House, some moderate Republicans continued to withhold support – setting it up for an uncertain future in the Senate.  
“First of all, the House bill is not going to come before us. The Senate is starting from scratch. We’re going to draft our own bill. And I’m convinced that we’re going to take the time to do it right.” -Senator Susan Collins (R – ME)
 

 The Next Steps: Senate Modifications to the AHCA

The bill will reach the Senate in the coming weeks, where it is anticipated to face opposition from Democrats and Republicans alike. A group of Republican Senators is drafting its own health care legislation, “incorporating” some provisions of the House plan. In all likelihood, the Senate version will be drastically different from the House bill. Senate Republicans are expected to take issue with the same matters that were points of contention in the House, setting this bill up for a protracted conference committee between the two chambers of Congress. The Senate will also proceed more cautiously until the Congressional Budget Office can provide a report on the bill’s fiscal impact. Once their likely changes are introduced, the bill will be sent back to the House for approval in its modified form. Matters will be further complicated by the reconciliation process, which prevents the Senate from including measures in the bill that do not bear a sufficient nexus to the federal budget. Only when both houses of Congress agree on all provisions will it be sent for the President’s signature. This process could last several months — depending on the degree of discord within Congress — with the Administration aiming for a final bill by the end of the year.

The Bottom Line

Despite last week’s changes to the AHCA, information reporting requirements will remain in their current form until the year 2020 – after which they will continue to be enforced, but will vary in their content. Any modifications introduced by the Senate will not likely affect or alter any of these requirements as they are currently contemplated. However, the substantive provisions of the Senate’s bill are likely to be starkly different from those in the version passed by the House.

Take Action

Contact us to learn how Sovos can keep your company compliant with ACA requirements in this time of change.

Further Reading

The post American Health Care Act Moves Forward, Carrying With It Reporting Requirements appeared first on Sovos.

About the Author

Tom Hospod

Tom Hospod is a member of the Tax Research Team for the Direct Tax division at Sovos Compliance, where his main areas of focus are Tax Withholding and Automatic Exchange of Information (AEOI). Prior to Sovos, Tom worked as a legislative aide in the Massachusetts House of Representatives. He also has experience in securities law—focusing on broker-dealer disputes and representing clients in FINRA arbitration. Tom is a member of the Massachusetts Bar, earned his B.A. from Boston College and his J.D. from the University of Miami.

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