Senate Drafts ACA Replacement Bill, Does Not Repeal Employer Reporting

Tom Hospod
June 23, 2017

Senate leadership released a discussion draft of the Better Care Reconciliation Act of 2017 – its version of the House’s American Health Care Act (AHCA) intended to repeal and replace the Affordable Care Act.

Although this legislation would nullify penalties for the individual and employer mandates, it would not repeal IRS reporting obligations under IRC §§ 6055 and 6056 or nullify penalties under IRC §§ 6721 and 6722.

The Senate bill maintains the premium tax credits that would be available to certain individuals who purchase their own insurance plans. Individuals are only eligible for these tax credits if they are not offered employer coverage – as such, the IRS will maintain employer information reporting as a means of administering these tax credits. The health insurance coverage credits would similarly depend on information provided by employers to their employees and to the IRS. Additionally, although not expressly addressed, this legislation does not appear to repeal the requirement for employers to report minimum essential coverage offers.

While reporting requirements may be simplified to a degree, pursuant to executive action, there are no definitive plans from the IRS to take any such action. Examples of simplification may include removing certain fields on Form 1095 that are specifically designed for enforcement of the employer mandate. The IRS will also have the option, as contemplated under the House bill, to eventually incorporate healthcare coverage reporting into Form W-2. However, for the time being, Applicable Large Employers will still be under an obligation to file Forms 1094-C, 1095-B, and/or 1095-C annually.

As mentioned above, this is merely a draft of the Senate bill. It is likely to change in order to placate Republican Senators who have indicated they would vote against the bill. The CBO is expected to release its report on the bill’s fiscal impact early next week, which will likely induce further modifications. Senate Majority Leader Mitch McConnell is aiming for a vote on June 29^th^. He has invoked a procedural rule which will allow the bill to bypass the committee process. If the measure is brought to a vote and passes, it will then go to a joint conference committee in order to reconcile the differences between the House and Senate bills. If the bill does not pass the Senate, it will likely undergo further revisions and redrafting.

You can read more about this bill’s general substantive provisions here.

Additional Sources

Health Affairs Blog

Society of Human Resource Management

Washington Post

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Tom Hospod

Tom Hospod is a Regulatory Counsel at Sovos Compliance. Within Sovos’ Regulatory Analysis function, Tom focuses om Affordable Care Act (ACA) reporting, Tax Withholding, and Automatic Exchange of Information (AEOI). Prior to Sovos, Tom worked as a legislative aide in the Massachusetts House of Representatives. 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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