IRS Adjusts Affordability Percentage Downward
The Internal Revenue Service (“IRS”) recently announced that the affordability percentage for 2018 will be 9.56 percent. This marks the first decrease in the annually indexed percentage and poses a potential pitfall for applicable large employers who may need to adjust the employee contribution for self-only medical coverage downward in order to meet the requirement to offer affordable coverage to avoid triggering an Employer Shared Responsibility penalty. Revenue Procedure 2017-36 (where the change in the affordability percentage was announced) also adjusted the affordability percentage used to determine whether an individual is eligible for an exemption from the Individual Mandate (discussed in another article in this issue of Healthcare Reform Update).
Key Provision Comparison: AHCA and PPACA
On May 4, 2017, the United States House of Representatives narrowly passed the American Health Care Act (“AHCA”), a bill that seeks to repeal and replace the Patient Protection and Affordable Care Act (“PPACA”). The AHCA is now before the Senate where Republicans hold a 52-48 majority. Since the bill was introduced through the budget reconciliation process it will require only 50 Senate votes to move forward (in case of a tie, Vice President Pence will cast the deciding vote). However, as the bill moves forward, it is important to remember that because Republicans are using the budget reconciliation process to advance the legislation, they are limited with respect to what they can include within the bill. In general, reconciliation rules prohibit the Senate from considering issues that do not impact the federal budget. As such, some provisions in the AHCA that do not impact the federal budget, such as broad policy based changes, will likely be excluded from the Senate bill. Although the timeline for moving forward is unclear, changes to the AHCA are likely. To help employers understand which PPACA provisions may be impacted by the AHCA, we have compiled a list of signicant PPACA provisions and examine how the AHCA, as it is currently written, impacts those provisions.
Forthcoming Guidance to Bring Changes to SHOP Marketplace
Earlier this month, the Centers for Medicare and Medicaid Services (“CMS”) announced that it intends to issue guidance regarding enrollment in healthcare coverage for small businesses through the Small Business Health Options Program (“SHOP”). The expected future guidance will no longer permit enrollment in the SHOPs through Healthcare.gov, but only through insurers or agents and brokers.
IRS Updates Affordability Indexing for Individual Mandate
In Revenue Procedure 2017-36, the IRS provides an updated affordability percentage used to determine whether an individual is eligible for a premium tax credit (premium assistance), as well as, new applicable percentages that will be used to calculate the amount of an individual’s premium tax credit under PPACA. The percentage used to determine whether employer-sponsored coverage is affordable was unexpectedly adjusted downward and is discussed in another article in this issue. In this article, we discuss the updated required contribution percentage which is used to determine whether an individual is eligible for an exemption from a penalty under PPACA’s Individual Mandate. These percentages are effective starting in 2018.
HHS Requests Comments on Reducing PPACA Burden
The Department of Health and Human Services (“HHS”) is requesting comments on reducing the regulatory burdens imposed by the Patient Protection and Affordable Care Act (“PPACA”). This request for information comes on the heels of other recent efforts by the Trump administration to reduce some of PPACA’s regulatory burden.
Questions and Answers for Employers
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