ACA Repeal And Replacement Fails In Senate; Future Legislation Possible

At the present time, it appears that legislation to repeal and replace the Affordable Care Act (ACA) – including the related 3.8% net investment income tax and additional 0.9% Medicare surtaxes – will not be revisited until after Congress’s August recess. GOP leaders in the Senate have tried, unsuccessfully, to advance several versions of ACA repeal legislation. Most recently, the Senate rejected a so-called “skinny” ACA repeal bill.

“Future legislation may address particular ACA provisions in a piecemeal manner,” says Edward Leeds, Counsel, Ballard Spahr LLP, Philadelphia. “Elements of repeal or replace legislation may emerge in other bills, particularly when Congress takes up the subject of comprehensive tax reform. For example, Congress may further delay, modify, or repeal the so-called Cadillac tax when it is not presented as part of a larger-scale effort to dismantle the ACA.”

During the 2017 filing season, the IRS announced that it would continue to process individual returns that do not report the taxpayer’s health coverage status under the ACA. At this time, the IRS has not announced it plans for the 2018 filing season.

Individuals who obtain coverage through the ACA Marketplace (Exchange) may be eligible for cost-sharing reductions. Reductions decrease annual out-of-pocket limits and, for lower-income individuals, further increase a plan’s share of total allowed benefits costs. The federal government subsidizes these costs by paying issuers for the value of the reductions they make.

“The future of cost-sharing reductions presents perhaps the most immediate concern,” Leeds noted. “The subsidies were the subject of an ongoing battle between Congressional Republicans and the Obama Administration. The dispute ended up in federal court, where a judge ruled that had no right to fund the cost-sharing reductions without a Congressional appropriation. That decision was stayed pending appeal, and the Obama Administration and, so far, the Trump Administration have continued to provide funds for the subsidies. The prospect that U.S. Department of Health & Human Services and Congress will discontinue the subsidies now weighs heavily as insurers on the Exchanges determine the final rates that they will submit for 2018.”

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