What the 2017 Tax Reform Actually Means for Employers

On December 22, 2017, President Trump signed the 2017 Tax Cuts and Jobs Act, marking his administration’s first successful modification to the Affordable Care Act (ACA). Two core aspects of the ACA are the employer mandate and in the individual mandate. The individual mandate requires U.S. citizens have minimum essential coverage for each month, qualify for an exemption, or face a tax penalty. Contrary to popular news, the tax act did not repeal the individual mandate. Rather, it took the teeth out of the law by making the individual mandate penalties $0 as of 2019. Individuals will still need to either have qualifying coverage or pay a penalty for the 2017 and 2018 filing seasons.
 
The employer mandate was left untouched by the bill. Applicable Large Employers (ALEs) will still need to offer affordable, minimum essential coverage providing minimum value to their full-time employees and their dependents.  This means employers likely won’t be affected until 2019 when healthy individuals may decide to forgo coverage absent a penalty. Some speculate employers may have adverse enrollment effects as a result of losing healthier employees.

There’s been some uncertainty if Congress will launch another repeal effort in 2018. Senate Majority Leader Mitch McConnell suggested in late December that the Senate will give up ACA repeal efforts in 2018 due to the difficult odds of repealing and replacing with a 51-49 Senate party division. But other Republicans, including Senator Lindsey Graham (R-S.C.) and House Speaker Paul Ryan (R-Wis.) expressed support for another attempt at reform. Ultimately employers will need to wait to see if Congress will pass other changes to the ACA.