What Remains of the Patient Protection and Affordable Care Act?
The Patient Protection and Affordable Care Act (“ACA”), also known as Obamacare, has faced serious and rising criticism since it was signed into law more than eight years ago. It overhauled the nation’s health care system and over the last year has been partially repealed. However, while some key provisions of the ACA are gone, large portions remain intact. Let’s review some of the basics of the status of the ACA.
Generally speaking, the individual mandate required all individuals to maintain minimum essential health care coverage or face a tax penalty for each month in which he or she did not have the required coverage. However, the Tax Cuts and Jobs Act repealed the individual tax penalty associated with the individual mandate, beginning on January 1, 2019. Therefore, while the individual mandate provisions of the ACA have not been repealed, the removal of the ability to impose any financial penalty for noncompliance means there will be no enforcement of the individual mandate beginning in 2019.
While the tax penalty associated with the individual mandate has been eliminated, the availability of health insurance through the Health Insurance Marketplace and, for those who qualify, premium tax credits and/or cost sharing reductions remain options for those looking for health insurance coverage. It is worth noting that the open enrollment period has been shortened and now occurs from November 1 through December 15 each year.
The employer mandate requires applicable large employers (i.e. those with 15 or more full-time or full-time equivalent employees) to offer each full-time employee affordable minimum essential health insurance coverage each year or face steep tax penalties. While the individual mandate tax penalties have been repealed beginning in 2019, the employer mandate and the associated penalties remains alive and well.
The first round of proposed assessments, issued via form Letter 226J, have been sent by the IRS for violations of the employer mandate that the IRS alleges to have occurred in 2015. A second wave of proposed assessments is expected to be issued before the end of the year for violations of the employer mandate that the IRS alleges to have occurred in 2016.
Proposed assessments can and often should be challenged. Many times, the violation occurred as a result of an error in reporting offers of insurance coverage to the IRS, rather than as a result of actual violations of the employer mandate. Some employers incorrectly believe that the proposed assessment is a final determination and agree to pay it using Form 14764. Once an employer agrees to the assessment, it becomes significantly more difficult to challenge.
Employers who fail to comply with the employer mandate based on the belief that it has been repealed or will be repealed in the near future are mistaken. While in July 2018, the House Ways and Means Committee proposed legislation (H.R. 4616) that would temporarily eliminate the penalties associated with the employer mandate from 2015 through 2018, that legislation has yet to be voted on in the House of Representatives. Absent some further action on H.R. 4616, or similar legislation, the employer mandate will continue to be enforceable through tax penalties.
The ACA requires employers to report to the IRS certain information about their employee’s health care coverage on forms 1094-C (Transmittal of Employer-Provided Health Insurance Offer and Coverage) and 1095-C (Employer-Provided Health Insurance Offer and Coverage). You can read more about the reporting requirements in previous articles here and here. While the tax penalties associated with individual mandate have been repealed beginning in 2019, the reporting requirement on 1095-C remain unchanged. However, it is expected that Form 1095-C will be modified beginning in 2019 due to the fact that the reporting on employee coverage will have no practical effect after that time. It is also important to note that employers who receive a proposed assessment as a result of an error in reporting should not issue corrected Form 1095-C and 1094-C absent clear guidance published by the IRS.
The Patient Centered Outcomes Research Institute (“PCORI”) fee was instituted to fund a trust to assist with research related to the advancing the quality and relevance of evidenced-based medicine and is paid by issuers of health insurance policies and plan sponsors of self-insured plans. The PCORI fee has always been a temporary fee and will automatically phase out for all plan years beginning on or after September 30, 2019. For plan years beginning on September 30, 2018, the fee has not yet been set, but is expected to be released after the start of 2019.
If you have any questions about this or any other health care or employment law issue, please contact Grace C. Nguyen Bond at firstname.lastname@example.org or 717-509-7226.
**This article is provided for informational purposes only and should not be construed as legal advice or as creating an attorney-client relationship where one does not already exist. **