Senate leaders have put pension reform, Medicare and tax administration provisions in the new budget package, the “Bipartisan Budget Act of 2018″ (BBA) legislation.
Members of the Senate are debating the BBA package on the Senate floor now.
Senate Majority Leader Mitch McConnell and Senate Democratic Leader Chuck Schumer developed the BBA package in an effort to keep the government from shutting down at midnight tonight, and, possibly, to establish a two-year budget agreement.
The package could also be a tugboat that could pull other, unrelated bills through Congress.
The BBA package is a Senate response to the House “Further Extension of Continuing Appropriations Act, 2018″ (FECCA) package. Members of the House passed that package by a 245-182 vote Tuesday.
Here are five BBA provisions that could affect financial professionals who help clients with taxes, Medicare or retirement income planning.
1. Section 41106: Form 1040SR for Seniors
This section could lead to the creation of a simple tax form, similar to the Form 1040EZ, that people ages 65 and older could use even if they had income from Social Security, or distributions from annuities or retirement plans.
2. Section 41104: Individuals Held Harmless on Improper Levy on Retirement Plans
The Internal Revenue Service sometimes gets penalty money from individuals by taking cash from the individuals’ retirement accounts. In some cases, the individuals appeal and get some or all of the money back.
If this provision became law, individuals who got retirement plan penalty money back from the IRS could return the money to the original retirement plans, or put the money into individual retirement accounts, without paying penalties.
3. Title IV, Subtitle A: Joint Select Committee on Solvency of Multiemployer Pension Plans
This section would create a new congressional committee that would try to come up with a proposal for addressing funding problems at multiemployer pension plans.
The committee would have 16 members, with half of the members coming from the Senate and half from the House. Half of the members from each House would be appointed by the majority party, and half by the minority party.
(Image: Centers for Medicare and Medicaid Services)
The committee would have to hold at least five public meetings or hearings, including three public hearings.
Drafters want the committee to come up with a multiemployer pension proposal the Senate can vote on by the end of the current congressional term, in 2020.
4. Section 53112: Preventing the Artificial Inflation of Star Ratings After the Consolidation of Medicare Advantage Plans Offered by the Same Organization
Medicare Advantage plan quality ratings, or “star ratings,” affect how much money the plan issuers get from the federal government.
This provision would prevent Medicare Advantage plan issuers from trying to increase plan star ratings by having higher-rated plans absorb lower-rated plans.
This provision would require an issuer to use a “weighted average” for the two plans’ star ratings to come up with the star rating for the combined plan. If, for example, the lower-rated plan had 10 times as many enrollees as the higher-rated plan, the star rating for the combined plan would be just a little higher than the rating for the bigger, lower-rated plans.
5. Section 53114: Adjustments to Medicare Part B and Part D Premium Subsidies for Higher Income Individuals
This section would increase what Medicare enrollees with a very high income pay for Medicare, by changing an “applicable percentage” used in premium subsidy calculations.
Individual filers with modified adjusted gross income of at least $500,000 would face an “applicable percentage” of 85%. Today, the applicable percentage for those high-income enrollees is 80%.
What the Budget ‘Measure’ Really Is
Like the House FECCA spending package, the Senate BBA budget measure is something other than an ordinary bill.
Senate leaders of introduced the BBA measure as an amendment to a Senate amendment to H.R. 1892.
The original version of H.R. 1892 would simply change the rules federal facilities follow when they fly the U.S. flag at half-staff.
At press time, it was not clear whether or not the BBA package could pass either in the Senate or the House in its current form.
Why the BBA Measure Is So Long
Democrats and Republicans have had a hard time finding enough common ground to pass many significant bills through “regular order” in recent years.
Budget bills, spending bills, and temporary spending bills do have a chance at getting through Congress.
Because the odds for passage of spending-related legislation are so much higher than the odds for passage of ordinary bills, lawmakers see trying to attach bills to spending legislation as their only hope of getting other types of bills through Congress.
The 504-page text of the House FECCA legislation is available here.
The text of the Senate BBA legislation is embedded in an 83-page Congressional Record file available here. The BBA text starts on page 16 of the PDF file.
A link to live video of Senate floor proceedings is available here.
— Read 5 Major Medicare Changes in the New Anti-Shutdown Bill on ThinkAdvisor.