How Reconciliation Can Change ACA

ACAWhile it will take support from Republicans and Democrats to fully replace Obamacare, a simple majority of Republican senators could repeal parts of the law through reconciliation. Here are just a few:

  • The individual and employer mandates can be reduced to zero
  • The Cadillac tax, currently delayed to 2020, could be repealed
  • Individual subsidies to purchase exchange coverage can be reduced to zero

Another welcome step requiring only a simple majority in the Senate would be increasing the limits on FSA and HSA contributions.

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Some Tax Benefits Increase Slightly, Others Unchanged

paperworkThe Internal Revenue Service (IRS) has announced a number of inflation-adjusted tax items for 2016, some of which remain unchanged. Among other items, the annual dollar limit on employee contributions to employer-sponsored health flexible spending arrangements (FSAs) remains unchanged (at $2,550).

Other Items of Interest

Other inflation-adjusted items for tax year 2016 that may be of interest to employers and employees include the following:

  • Qualified Transportation Fringe Benefits. For tax year 2016, the monthly limitation for the qualified transportation fringe benefit remains at $130 for transportation, but rises to $255 for qualified parking (up from $250 for tax year 2015).
  • Archer MSAs. The 2016 limits for annual deductibles and maximum out-of-pocket expenses for high deductible health plans (HDHPs) are as follows:
    • Self-only coverage. The plan must have an annual deductible that is at least $2,250 (up from $2,200 for 2015); but not more than $3,350 (up from $3,300 for tax year 2015). The annual out-of-pocket expenses required to be paid (other than for premiums) for covered benefits cannot exceed $4,450 (unchanged from 2015).
    • Family coverage. For tax year 2016, the floor for the annual deductible remains at $4,450, however the deductible cannot be more than $6,700 (up $50 from 2015). The annual out of-pocket expenses required to be paid (other than for premiums) for covered benefits cannot exceed $8,150 (unchanged from 2015).
  • Earned Income Credit. The maximum Earned Income Credit amount is $6,269 for taxpayers filing jointly who have 3 or more qualifying children (up from a total of $6,242 for tax year 2015). IRS Revenue Procedure 2015-53 includes a table that provides maximum credit amounts for other categories, income thresholds, and phase-outs.

For More Information
Details on these inflation adjustments and others are contained in Revenue Procedure 2015-53.

Employers Still Look to Consumer Directed Plans

To combat cost increases that are expected to top 7% this year, many employers are looking at consumer directed health plans for savings. More than half of employers surveyed recently by the National Business Group on Health are increasing the percentage of plan costs paid by employees while 4 out of 10 have increased their in-network deductibles. When it comes to large employers, 75% are offering High Deductible Health Plans (HDHPs) with Health Savings Accounts (HSAs) this year, compared to just over 60% in 2011. Continue reading