How the IRS Is Interpreting Health Reform Law
The U. S. Supreme Court has upheld the constitutionality of the 2010 health care reform legislation, including its linchpin individual mandate that requires individuals to pay a penalty if they fail to carry minimum essential health insurance.
In its landmark 5 to 4 decision handed down on June 28, 2012, the Court cleared the path for President Obama’s signature health care law, the Patient Protection and Affordable Care Act (PPACA) and the Health Care and Education Reconciliation Act (HCERA), to move forward on schedule. However, the mechanism used to force states to expand Medicaid eligibility did not pass constitutional muster.
Impact: The PPACA was passed by Congress and signed into law by President Obama in March 2010. Since then, the IRS and other federal agencies have issued final regulations, temporary regulations, proposed regulations, and other guidance on many of the tax provisions in the PPACA (also known as the ACA). Many businesses and employers have waited to fully implement these regulations until the Supreme Court determined the fate of the health care reform law. Now that the Court has spoken, all taxpayers — businesses large and small, as well as individuals — must prepare in earnest for implementation of the PPACA. Some requirements have been effective since 2010 and 2011, others have been in force only this year, and many other major provisions apply starting in 2013, 2014, or later.
Comment: Uncertainty over the health care legislation has been abated by the Supreme Court’s decision, but clearly not eliminated. Concerns remain over how the IRS will interpret parts of the law as it continues issuing guidance to implement it. Also adding to uncertainty are renewed pledges made by the presumptive GOP-nominee for president Mitt Romney to repeal the PPACA if elected, and by GOP leaders on Capitol Hill to dismantle the health care legislation. In the meantime, however, employers and taxpayers must assume that key provisions will go into effect in 2013, 2014, and beyond, or risk being unprepared to fully comply in time for the law’s complex provisions.
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