GOP s ACA Replacement Plan Stand alone HRAs ACA E File

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GOP s ACA Replacement Plan Stand alone HRAs ACA E File
Calendar27 June 2016

House Republicans last week issued their plan to repeal and replace the Affordable Care Act (ACA) which, as expected, calls for capping the employee tax exclusion for the value of employer-provided health care coverage.  The plan doesn’t offer details but argues that the current unlimited exclusion encourages overspending on health care, holds down wages, and disproportionately benefits wealthier workers.  The proposal would replace ACA’s insurance subsidies with a universal tax credit for individuals and families. The credit would be adjusted for age and indexed over time, although no specifics were offered.

Other proposals in the 37-page paper include promoting consumer-directed health care plans; providing legal clarity for employer wellness programs; retaining certain popular insurance market reforms; and encouraging greater competition among insurers. 

The House passed legislation (HR 5447) June 21 that would restore small employers’ ability to provide pre-tax dollars through health reimbursement accounts (HRAs) to help their employees buy individual-market health insurance.  The “Small Business Health Care Relief Act” would apply to companies with fewer than 50 workers and overturn 2013 Treasury Department guidance that barred employers from helping active employees buy individual policies on a pre-tax basis.  A Senate companion measure (S 3060) was recently introduced with bipartisan support and strong backing from the employer community, suggesting that the legislation has a chance of enactment this year. 

Employers and others face a June 30 deadline for e-filing with IRS 2015 forms containing health plan eligibility and coverage information (IRS Forms 1094/5-C and 1094/5-B). Mandated by the ACA, this data helps IRS determine whether individuals and employers owe any shared-responsibility assessments. In addition, IRS has already posted 2016 drafts for coverage statements from public insurance exchanges (Form 1095-A) and other providers (Form 1095-B), along with a draft 2016 transmittal form (1094-B). However, draft 2016 Forms 1094/5-C for employers or instructions for any of these forms are not yet available.

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