The House Freedom Caucus endorsed the MacArthur Amendment last week, bringing Republicans closer to the 216 votes they need in order for the AHCA to pass. For now, there is no reason to assume that the MacArthur Amendment will have any impact on reporting requirements beyond those contemplated in the original bill. Many are wondering how the recently introduced “MacArthur Amendment” would impact reporting requirements under the American Health Care Act (AHCA), but there appears to be no immediate effect. However, possibilities for change beyond 2020 still exist. The Trump Administration’s unanticipated attempt to revive the AHCA raises questions on the status of the Affordable Care Act (ACA) and associated employer obligations. The Amendment permits individual states to “opt out” of certain provisions of the law to increase access to healthcare and reduce insurance premiums.
What is the MacArthur Amendment?The MacArthur Amendment allows states to request waivers from any of three key provisions:
- The 5:1 Age Rating Ratio: The age rating ratio, which is already being increased from 3:1 to 5:1, will be subject to further increases by states that obtain waivers beginning in 2018.
- Essential Health Benefits: The federal government will permit states with waivers to require coverage of fewer essential health benefits than those defined by federal standards beginning in 2020.
- The Continuous Coverage Requirement: States will be permitted to obtain a waiver from the “Continuous Coverage Requirement” and replace it with health status rating and underwriting of insurance policies starting in 2019. Each state must operate a risk mitigation plan or participate in the Federal Invisible Risk Sharing Program to maintain an active waiver.
What is the Impact to Reporting?The MacArthur Amendment’s waiver and exemption provisions will not directly impact reporting requirements as they currently exist in all likelihood. IRS reporting requirements were contemplated under the initial proposal of the AHCA, and the text of the Amendment contains nothing to suggest they will be repealed or modified. This Amendment’s stated objective is to enable states to take measures that would reduce premiums and increase access to care. The states lack authority over federal reporting requirements – which, in any case, would not have any bearing on premium and access levels. As such, modifications to reporting would fall outside of the Amendment’s rationale. Looking beyond 2020, essential health benefits waivers could possibly impact the reporting of minimum essential coverage in some manner. While it could result in relaxed reporting requirements, there is also potential for the introduction of new state reporting requirements to enforce a state’s own essential benefits standard. However, it is also entirely possible the IRS could maintain reporting requirements irrespective of a state’s waiver, as it intended to continue requiring reporting even in the absence of employer mandate enforcement under the AHCA.
What is the Likelihood This Moves Forward?The House Freedom Caucus endorsed the MacArthur Amendment last week, bringing Republicans closer to the 216 votes they need to pass AHCA into law. It is currently unclear when this will be submitted to a vote and whether Republicans will be able to persuade enough moderates to support the measure. The Bottom Line: For now, there is no reason to assume the MacArthur Amendment will have any impact on reporting requirements beyond those contemplated in the original bill. This amendment is exclusively focused on marketplace reforms, which are being addressed as a separate and distinct issue from healthcare reporting and IRS penalties. Although the opportunity exists for the IRS and Congress to act on the reporting requirements at some later point in time, there are currently no concrete plans to take such action.
Take ActionRead about the initial AHCA bill and the effects of regulatory updates on our blog. View the Sovos and Aberdeen Affordable Care Act Benchmark Report. Learn more about Sovos ACA Reporting.
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About the Author
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.More Content by Tom Hospod