How Will New Tax Law Affect Employee Benefits?

The Tax Cuts and Jobs Act (the “Act”), signed into law by President Trump on December 22, 2017, effectively repeals the requirement under the Affordable Care Act (ACA) that most Americans obtain ACA-compliant health coverage, effective in 2019.  The Act repeals the individual mandate, the provision in the ACA that requires individuals to have health insurance or face a penalty fee.

The Congressional Budget Office predicts that two to three million fewer individuals will have employer coverage over the next decade as a result of the Act.  Consequently, some employers may avoid shared-responsibility payments, which are imposed only if employees receive premium tax credits through the Marketplace.

The Act does not repeal the employer mandate or the employer reporting obligations under the ACA, although many in the benefits community anticipate that a repeal of the employer mandate will follow.  Other employer requirements, such as the PCORI fees, could also be repealed.  For now, reporting for 2017 is still required, and the IRS has been sending penalty notifications to employers that owe shared-responsibility payments for noncompliance with the employer mandate.

If you have questions about the Act, call ASR Health Benefits at (616) 957-1751 or (800) 968-2449.