A Holiday Gift: Tax Reform Passes the House & Senate

The House and Senate have passed the Tax Cuts and Jobs Act, which is most similar in content to the Senate's version of tax reform. Significantly in the Health Care Reform landscape, the Bill repeals the individual mandate (but leaves the Section 4980H ‘employer mandate’ and obligation to report via Forms 1094 and 1095 intact). Individuals who do not enroll in minimum essential coverage will no longer face a penalty beginning in 2019.

Notedly, the Cadillac tax remains largely unchanged by the Bill. The only adjustment in this area is the index which tracks the amount that will trigger the tax. As of now, the threshold amounts are $10,200 for single coverage, and $27,500 for all tiers other than single. But these amounts will be indexed to the Chained CPI for 2020 when the tax becomes applicable. Plans exceeding these amounts will be taxed at 40% of the amount by which they exceed the limit.

Employers should continue preparing their 1094 and 1095 forms for filing early in 2018, and their future planning for the Cadillac Tax on health plans that exceed certain thresholds by 2020.

While most elements of the Bill exceed the scope of this alert, the Bill in its entirety can be viewed online.