The good news about the initial proposal for comprehensive tax reform legislation released by House Republican leaders last week is that it did not include a cap on the tax exclusion for employer-sponsored health insurance. But the bill would repeal an array of benefits as a way to pay for lower individual and corporate tax rates. If passed, these changes would generally take effect in 2018. Benefits in jeopardy of losing or limiting their tax-favored status include:
Whether and when Congress can agree to a final tax bill and whether these or similar provisions might be included in that bill are far from certain. But given the potential disruption these changes could create for employers and employees, you’ll want to spend some time proactively thinking through the implications. Follow these five steps to ready yourself for quick action should the tax legislation become law:
While not an immediate action item, remember that changes to fringe benefits will require you to revise your plan communications and amend relevant plan documents. Although the tax reform bill faces tough challenges, it’s worth spending a little time now to ensure you aren’t caught flat-footed if a reform package passes Congress.