Tax Bill Offers Mixed Bag as Congress Punts Other Health Issues to 2018 

As the sweeping Republican tax bill heads to enactment, its health care and fringe benefit provisions present a mixed bag to employers. Under the legislation, the Affordable Care Act’s individual mandate penalty will be repealed beginning in 2019, potentially taking millions of people out of the individual health care market. The bill will also do away with the employer deduction for qualified transportation fringe benefits and offer a two-year trial program offering tax credits to employers providing certain paid family leave.

The final legislation is also notable for what’s not included. It drops several House bill proposals that would have eliminated employee tax breaks for adoption and dependent care programs, “Section 127” educational benefits, and the employer deduction for on-site gyms and athletic facilities.

Meanwhile, the GOP's focus on tax reform has left them without a clear strategy for how to pass a short-term spending bill by midnight Friday and avoid a government shutdown. That spending bill has been seen as a possible vehicle for other health care legislation such as individual market stabilization, a delay of the Cadillac tax, potential HSA enhancements, retroactive relief from the employer mandate, and funding the children’s health insurance program (CHIP).

Concerned by the loss of the ACA’s individual mandate, Senator Susan Collins (R-ME) voted for the Senate’s tax bill on the condition that Republicans add bipartisan market stabilization legislation to the short-term spending package due Friday. That legislation aims to help shore up the individual market by funding for the ACA’s cost-sharing reduction subsidies, giving more flexibility to states to pursue their own reforms, and providing states with financial aid to set up reinsurance programs for high-cost patients.

GOP leaders have decided, however, to put off consideration of all health care proposals, with the possible exception of short-term CHIP funding -- until mid-January, when a broader spending bill will be needed. The decision came after conservative House Republicans made clear they would not vote for any measure that includes a “bailout” for insurance companies.

“It looks like the Christmas present of lower health insurance premiums will now have to be a Valentine’s Day present,” said Sen. Lamar Alexander (R-TN), who has led the effort to pass market stabilization legislation.