Federal District Court Judge Strikes Down the ACA

On December 14, 2018, a federal district court judge for the Northern District of Texas issued a ruling striking down the Affordable Care Act (ACA) on the grounds that the Individual Mandate was unconstitutional, and that the rest of the law cannot withstand constitutional scrutiny without the Individual Mandate. District Court Judge Reed O’Connor’s decision relates to a lawsuit filed earlier this year by 20 states and two individuals. The plaintiffs argued that the Tax Cuts and Jobs Act of 2017 — which amended the Individual Mandate to eliminate the penalty on individuals that failed to purchase qualifying insurance effect January 1, 2019 — rendered the Individual Mandate unconstitutional. The plaintiffs further argued that the Individual Mandate was inseverable from the rest of the ACA, and, therefore, that the entire ACA should be struck down. The defendants in this case were the United States of America, the U.S. Department of Health and Human Services (HHS), Alex Azar, in his capacity as the Secretary of HHS, and David J. Kautter, in his capacity as the Acting Commissioner of the Internal Revenue Service (IRS). 16 states and the District of Columbia intervened as additional defendants. In order to properly understand the district (more…)

IRS Proposed Rule on 199A Passthrough Deduction

The 199A passthrough business deduction was created under the Tax Cuts and Jobs Act that was signed into law on December 22, 2017. The creation of the 199A section within this legislation has since created many questions and needed clarifications. On August 8, 2018, the Internal Revenue Service (IRS) issued proposed regulations that provide guidance that further clarifies which passthrough businesses are able to take advantage of this deduction as well as how taxpayers and tax professionals alike can navigate this new deduction. Section 199A allows domestic businesses operated as a sole proprietorship or through a partnership, Limited Liability Company (LLC), S corporation, trust, or estate to deduct up to 20% of qualified business income from tax years between 2018 and 2025. Those who have taxable income of $315,000 or less for joint filers and $157,500 or less for single filers will now be able to take advantage of the deduction. Those who exceed these taxable incomes will be subject to certain limitations. These limitations could include the taxpayer’s taxable income and limitation by 50% of W-2 wages. These regulations clarify that individuals and certain trusts and estates may be able to take a deduction of up to 20 percent (more…)

ACA Affordability Adjustment

The Internal Revenue Service (IRS) announced on May 21, 2018 that it would be increasing the employee shared responsibility premium percentage under the ACA for 2019. Today, employers are compliant with the ACA if their health plans provide “essential health benefits” that are “affordable” for employees. The “affordability” requirement states that an employer’s health plan premium cost for employees must not exceed 9.56% of household income for the lowest cost, self-only plan. The IRS is adjusting that rate based upon inflation to 9.86% for 2019. With the average cost of health insurance single premium increasing 4% in 2017, this is a bit of relief as employers struggle with maintaining the affordability requirement....

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IRS Notice 1036

The Internal Revenue Service has released Notice 1036, which updates the income-tax withholding tables for 2018 reflecting changes made by the tax reform legislation enacted last month. This is the first in a series of steps that IRS will take to help improve the accuracy of withholding following major changes made by the new tax law. If you have a payroll service, they should be ensuring that your organization is using the correct withholding tables.  Employers should be using these new tax withholding amounts as soon as possible but no later than February 15, 2018.  If you need assistance with ensuring that your organization is utilizing the appropriate withholding schedule....

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401k Contribution Increase Announced

The Internal Revenue Service (IRS) announced last week that it will increase the maximum 401k contribution from $18,000 to $18,500 for 2018.  Also increasing is the maximum contribution by both employer and employee from $54,000 to $55,000 for next year. This is the first time in several years that the IRS has increased these maximum amounts. Plan administrators should adjust their systems to reflect the new contributions limits and ensure that they appropriately notify all employees about the changes....

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Win for Employers with H.R. 2029, Consolidated Appropriations Act, 2016

On December 18, 2015 President Obama signed into law H.R. 2029, The Consolidated Appropriations Act, 2016, which is a nearly $2 trillion budget deal covering government funding and taxes.  This law provides some relief to employers who offer employer-sponsored health plans from two key provisions of Affordable Care Act (ACA).  The ACA has been one of the most contentious political issues during the Obama administration as its impact on employers is significant. The first key change effect the “Cadillac Tax”.  The Cadillac Tax is a non-deductible 40% excise tax that applies to the cost of employer-sponsored health coverage whose value exceeds the prescribed thresholds of $10,200 for individual coverage and $27,500 for family coverage.  These thresholds which were established in 2010 were supposed to be implemented starting in 2018.  The purpose of this tax was threefold: reduce the federal tax preferred treatment of employer sponsored health benefits reduce excess insurance and healthcare spending by both the employers and employees help fund the expansion of healthcare coverage under the ACA. This tax was expected to raise $1.7 billion in 2018. One of the major criticisms of the Cadillac Tax is that it is indexed to inflation.  Health care expenditures increase at...

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ACA Filing Deadline Extension

In Fall 2015, we alerted you to a deadline for a new employer filings under the Affordable Care Act.  On December 28, 2015 the IRS extended the deadline to furnish and file the required forms for all required filers. The new deadlines are: March 31, 2016, to deliver the 2015 Forms 1095-C to affected employees; May 31, 2016, to manually file the 2015 Forms 1094-C and 1095-C with the IRS — for employers who’re eligible for paper filing; and June 30, 2016, to electronically file the 2015 Forms 1094-C and 1095-C with the IRS. According to the IRS this is a one-time filing extension and will not be further extended.   This will give employers and payroll companies additional time to prepare for this new requirement.  If you fail to make the required filings by these extended deadlines, you will be subject to penalties.  If you have not yet determined how you will prepare for this deadline, you should be contacting your payroll service or benefits broker for assistance. As always, the American Ambulance Association can assist you with any ACA questions.