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Life Health > Health Insurance > Your Practice

Republicans Post Text of ACA Individual Mandate Proposal

By Allison Bell

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The Senate Finance Committee has unveiled a package of proposed tax bill amendments that could set the Affordable Care Act individual coverage mandate penalty at zero.

The package also includes a provision that could create a tax credit for employers that offer paid Family and Medical Leave Act (FMLA) leave.

The package does not appear to include any changes to the life insurance provisions in the tax bill — the Senate’s version of the Tax Cuts and Jobs Act bill.

(Related: Senate Republicans to Add ACA Mandate Fight to Tax Fight)

The committee has described the packet as a “modification to the chairman’s mark,” or draft, of the tax bill.

Senate Republicans posted the original draft of the bill Friday, and members of the Senate Finance Committee started marking the bill up Monday. The committee continued the markup today, and it’s preparing to start a third day of debate at 9 a.m. tomorrow.

The committee has been streaming video of the markups live on the web.

The committee has posted copies of the amendment packet and related documents here. The committee will put the video feed for tomorrow’s meeting on that same website. (Update (11:30 a.m. EST Wednesday): The committee turned on the markup meeting video feed about 10 a.m. today.)

The Bill History

The House Ways and Means Committee has already approved a House version of the tax bill, H.R. 1, and the House Rules Committee started packaging the bill for House floor action today.

H.R. 1 does not include an ACA individual health mandate provision, but House Rules Republicans have proposed at least two amendments that could nullify the effect of the penalty.

The House bill and the current version of the Senate bill do not include ACA individual mandate provisions, in part because some lawmakers have argued that mixing health policy with tax reform would make a complicated, controversial bill even more complicated and more controversial.

Analysts at the Congressional Budget Office have predicted that eliminating the provision could lead to a net gain of more than $300 billion for the federal government, in part by reducing the number of people who use federal subsidies to pay for health coverage.

On Monday, President Donald Trump tweeted a request for Congress to add an individual mandate repeal provision to the tax bill.

Insurance and Benefits Provisions

The Affordable Care Act requires many people who have what the government classifies as solid major medical coverage for much of the year or else pay a penalty. For most affected people, the penalty amounts to 2.5% of modified adjusted gross income over the tax filing threshold.

The proposed amendment packet, which is described as a “modification of the chairman’s mark” of the Senate tax bill, would set the penalty rate at zero.

The FMLA credit provision would provide a general business credit for employers that offer paid FMLA leave.

An eligible employer could get an FMLA credit if it paid an employee’s wages while an eligible employee was out on FMLA leave.

The employer would have to pay at least 50% of the employee’s normal wages during the leave period to get the credit.

If an employer paid the employee at least 50% of the employee’s normal wages, the credit percentage rate would be one-quarter of the portion of the employee’s normal wages paid during the leave period, up to a rate of 25%.

If, for example, an employer paid 60% of the employee’s wages, the credit would be equal to 15% of the wages paid.

If an employer paid 100% of the employee’s normal wages, the credit would be equal to 25% of the wages paid.

To qualify, an employer would have to offer all qualifying full-time employees at least two weeks of annual paid family and medical leave.

A qualifying employee would be an employee who has worked for the employer for more than a year and who, for the preceding year, “had compensation not in excess of 60% of the compensation threshold for highly compensated employees,” according to the amendment packet.

The provision could be of interest to insurers, because, in some markets with paid family leave mandates, employers are using insurance to meet the leave payment obligations.

The packet also includes a long section of changes to tax rules related to wine and beer, including, for example, a provision related to “transfers of beer in bond.”

—Read GOP Senator Floats Repealing ACA Individual Mandate in Tax Bill on ThinkAdvisor.


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