A project of the George Washington University's Hirsh Health Law and Policy Program and the Robert Wood Johnson Foundation

Tax Policy

Implementation Briefs

Update: Proposed IRS Procedures for Tax-Exempt Hospitals to Correct and Disclose Failures to Meet Their Community Benefit Obligations Under the Internal Revenue Code

Categories: Internal Revenue Service, Tax Policy

Posted on January 13, 2014

In order to be exempt from federal income taxes, nonprofit hospitals seeking such a designation under the Internal Revenue Code must provide a community benefit, a policy that has been in place since 1969 but that has gone essentially unenforced since its creation by the Nixon Administration. Government estimates of the value of nonprofit hospital tax-exemption placed the total national value at more than $12 billion in 2002, a figure that undoubtedly has grown over the past decade and that reflects both federal tax losses and losses resulting from the fact that most states and localities use federal law to determine exemption from state and local property, sales, and income taxes...

Notice of Proposed Rulemaking: Small Employer Tax Credit

Categories: Health Insurance, Tax Policy

Posted on October 16, 2013

This Implementation Brief examines a Notice of Proposed Rulemaking (NPRM) issued by the Internal Revenue Service (IRS) on August 26, 2013 concerning the tax credit available to small employers that offer health insurance coverage to their employees...

Final Rule: Taxable Medical Devices

Categories: Implementation Update, Tax Policy

Posted on February 13, 2013

The Internal Revenue Service (IRS) and Department of Treasury released the final Medical Device Tax rule on December 11, 2012. The rule imposes a tax on the sale of any “taxable medical device” by the manufacturer, producer or importer of a device. The amount of the tax is 2.3 percent of the price of the device, with an effective date of January 1, 2013.

UPDATE: When Should Uninsured Family Members of Employees with Access to Affordable Self-Only Employer Coverage Qualify for Premium Tax Credits?

Categories: Health Insurance, Medicaid and CHIP, Tax Policy

Posted on February 1, 2013

As noted in a previous Implementation Brief , the Affordable Care Act (ACA) allows for premium assistance through tax credits for the purchase of family coverage from qualified health plans sold through health insurance marketplaces. To be eligible for tax credits, individuals must not otherwise be “eligible for minimum essential coverage” and must have annual incomes of 100-400 percent of federal poverty level. With regard to individuals who are offered employer-sponsored coverage, the law states that in order to qualify for the premium tax subsidy, the employer-sponsored coverage must be deemed unaffordable, defined by the IRS as an employee contribution requirement for self-only coverage that exceeds 9.5 percent of household income. Although the ACA extends eligibility for assistance (based on the affordability test) to workers’ dependents, the remaining question, as noted in another earlier Brief, was whether uninsured family members of employees with access to affordable self-only employer coverage can qualify for a premium tax credit. The IRS answered that question...

Update: Shared Responsibility for Employers Regarding Health Coverage

Categories: Health Insurance, Implementation Update, Tax Policy

Posted on January 23, 2013

On January 2, 2013, the Department of Treasury issued proposed regulations (78 Fed. Reg. 218) that describe in detail the standards that will be applied in determining which employers are covered by the Affordable Care Act’s “shared responsibility” requirements covering large employers. The proposed rules, which build on earlier guidance issued over the 2011-2012 time period, interpret §4980H of the Internal Revenue Code, as added by the ACA. This section provides...

A Summary of the Health-Related Provisions of the American Taxpayer Relief Act of 2012 (H.R. 8)

Categories: 112th Congress, Congressional Action, Long Term Care, Medicaid and CHIP, Medicare, Public Health, Tax Policy

Posted on January 8, 2013

Both the Senate and the House passed H.R.8 (89-8 and 257-167, respectively), the American Taxpayer Relief Act, on January 1, 2013. President Barack Obama signed the Act into law on January 3, 2013. The measure extends Bush-era income and other tax cuts for individuals and families making up to $400,000 and $450,000 respectively. For individuals and families above this income threshold, the bill increases taxes from 35% to 39.6%. H.R. 8 also postpones...

Update: CMS FAQs on Exchanges, Market Reforms and Medicaid

Categories: Health Insurance, Implementation Update, Medicaid and CHIP, Tax Policy

Posted on December 19, 2012

This Update summarizes the CMS Frequently Asked Questions (FAQ) document issued on December 10, 2012.

Update: Health Insurance Reforms and Rate Review

Categories: Health Insurance, Implementation Update, Tax Policy

Posted on December 10, 2012

The Patient Protection and Affordable Care Act (ACA) included health insurance market reforms designed to ensure that individuals and small businesses could not be denied coverage or be charged significantly higher premiums because of an individual’s health status. While some of the market reforms enacted in the ACA were designed to go into effect shortly after enactment (e.g., requiring issuers and employer-sponsored plans to cover adult children up to age 26 on a parent’s health plan, and limiting pre-existing condition exclusions) the most sweeping reforms...

ACA Policy Implementation: A Snapshot of Key Developments and What Lies Ahead

Categories: Health Insurance, Implementation Update, Medicaid and CHIP, Medicare, Tax Policy

Posted on December 5, 2012

Beginning January 1, 2014, millions of previously uninsured individuals will gain access to health insurance coverage under the Affordable Care Act (ACA). On November 20, 2012, the Obama Administration proposed a series of regulations that move the nation significantly toward full implementation. These proposed rules will be analyzed at greater length in coming GPS Implementation Brief updates. In the meantime, this overview summarizes the major federal implementation matters that the Administration has recently released or is expected to address in policy or program implementation in the coming weeks and months as the 2014 full implementation date approaches. Together, these matters address...

When Should Uninsured Family Members of Employees with Access to Affordable Self-Only Employer Coverage Qualify for Premium Tax Credits?

Categories: Health Insurance, Tax Policy

Posted on October 3, 2012

This Implementation Brief on premium tax credits examines the question of how the Affordable Care Act (ACA or the Act) addresses the problem that arises when low- and moderate-income employees have affordable “self-only” employer coverage, but face prohibitively high costs for family coverage, well beyond levels considered “affordable” under the Act. Coverage for a full family is extremely expensive: according to the Kaiser Family Foundation, the average 2012 cost of family coverage approaches $16,000, placing unsubsidized family benefits beyond the reach of all but affluent families. Kaiser further reports that while...

Update: Financial Assistance Policies for Nonprofit Hospitals that Seek Federal Tax-Exempt Status

Categories: Health Care Quality and Delivery System Reform, Implementation Update, Tax Policy

Posted on July 9, 2012

On June 22, 2012, the Internal Revenue Service and Treasury Department released for public view a notice of proposed rulemaking (NPRM) regarding the obligations of nonprofit hospitals seeking federal tax-exempt status. The NPRM deals with that portion of the ACA related to the obligation of nonprofit hospitals to maintain financial assistance and emergency medical care policies, as well as certain billing and collection policies, as a condition of federal tax exemption. The NPRM comment period will be for 90 days following Federal Register publication. The agencies have identified...

A Closer Look at the Medicaid Holding in NFIB v Sebelius: Key Implementation Questions

Categories: Health Insurance, Judiciary, Legal Challenges, Medicaid and CHIP, Tax Policy

Posted on July 3, 2012

In NFIB v Sebelius the United States Supreme Court upheld the constitutionality of the Patient Protection and Affordable Care Act (ACA or the Act). At the same time, the decision adds a new dimension to the implementation of §2001(a) of the Act, which establishes expanded Medicaid eligibility for certain low-income people. This Implementation Brief begins with a discussion of exactly what the Court held in its Medicaid ruling. It then discusses the significance of the majority conclusion, as well as the key implementation questions that arise in the wake of this opinion.

Summary of the U.S. Supreme Court decision in the case of National Federation of Independent Businesses et al. v. Sebelius, Secretary of Health and Human Services, et al.

Categories: Health Insurance, Judiciary, Legal Challenges, Medicaid and CHIP, Tax Policy

Posted on June 28, 2012

The Supreme Court handed down its long-awaited ruling in the case of National Federation of Independent Businesses et al. v. Sebelius, Secretary of Health and Human Services, et al., upholding the individual requirement to maintain insurance coverage as a reasonable exercise of Congress’s taxing and spending authority and also upholding the constitutionality of the Medicaid coverage expansion. In a surprise coalition, Chief Justice Roberts was joined in his majority opinion by Justices Stephen Breyer, Ruth Bader Ginsburg, Sonia Sotomayor and Elena Kagan. The summary below describes the majority opinion, the concurring opinion (authored by Justice Ginsburg), and the dissenting opinion (written by Justice Scalia). Because the Court upheld the individual mandate, it never reached...

Update: Health Insurance Premium Tax Credit Final Regulations

Categories: Health Insurance, Implementation Update, Tax Policy

Posted on June 22, 2012

On May 18, 2012, the Department of Treasury (Treasury) issued final regulations on the health insurance premium tax credits enacted by the Patient Protection and Affordable Care Act (ACA). The final regulations, which took effect May 23, 2012, contain amendments to the Income Tax Regulations (26 CFR part 1) and address several issues noted in the proposed regulations (NPRM) issued by the Treasury on August 17, 2011. The refundable premium tax credits were created to help make the purchase of health insurance through the health insurance Exchanges more affordable for low- to middle-income individuals ineligible for Medicaid and without affordable ...

Update: Health Insurance Premium Tax Credits

Categories: Health Insurance, Implementation Update, Tax Policy

Posted on September 2, 2011

This Update is the third in a series on a group of three regulations, all of which are summarized at HealthReformGPS.org. Together the rules are designed to implement both the Medicaid eligibility expansions, the process of determining eligibility for premium tax credits and cost sharing assistance in the Exchange individual market, and standards for employers purchasing coverage in Exchanges. Collectively, the rules are designed to allow individuals and families to acquire and keep coverage and move more seamlessly among publicly-supported sources of health insurance as family income and circumstances change.

IRS Notice and Request for Comments Regarding the Community Health Needs Assessment Requirements for Tax-Exempt Hospitals

Categories: Department of the Treasury, Implementation Update, Internal Revenue Service, Key Developments, Public Health, Rulemaking, Rules, and Guidance, Tax Policy

Posted on August 23, 2011

On July 7, 2011, the Treasury Department and the Internal Revenue Service (IRS) published a Notice and Request for Comments on a proposed policy regarding the Affordable Care Act’s new requirements related to tax exempt hospitals’ community health needs assessment (CHNA) obligations. Section 9007 of the Act added new Section 501(r) to the Internal Revenue Code, which delineates a series of statutory requirements, outlined in a previous implementation brief, applicable to nonprofit hospitals that seek tax-exempt status under Section 501(c)(3). The purpose of the Treasury/IRS Notice is to both describe the agencies’ approach to implementing hospital organizations’ CHNA obligations and to invite comments regarding their proposals. The CHNA requirements are effective for taxable years beginning after March 23, 2012. However, the Notice specifies that hospitals currently engaged in conducting CHNA-related activities -- including development and wide publication of a needs assessment and adoption of an implementation strategy -- can rely on the policies contained in the Notice as they move forward.

Update: Repeal of 1099 Reporting Requirement

Categories: Implementation Update, Tax Policy

Posted on July 28, 2011

Section 9006 of the Affordable Care Act (ACA) would have required businesses to issue 1099 forms for transactions over $600 with other corporations, such as vendors and suppliers. This was a significant expansion of the reporting requirements and was seen by many as a huge burden on businesses, particularly small businesses. On April 14, 2011, the Comprehensive 1099 Taxpayer Protection and Repayment of Exchange Subsidy Overpayments Act of 2011 was signed into law, repealing the ACA Section 9006 reporting requirements.

Health Insurance Exchanges Update: Qualified Health Plans, Reinsurance, Risk Corridors and Risk Adjustment

Categories: Health Insurance, Implementation Update, Medicare, Tax Policy

Posted on July 19, 2011

A major problem in the U.S. health care system is the lack of affordable health insurance options for individuals and small businesses. These groups also have no easy way to compare plans in terms of premium cost, benefits and cost sharing, provider networks, or quality of care provided. The Affordable Care Act (ACA) seeks to address these problems by making private health insurance available to qualified small businesses and individuals through health insurance Exchanges beginning January 1, 2014.

New Requirements for Tax-Exempt Charitable Hospitals

Categories: Public Health, Tax Policy

Posted on December 20, 2010

This implementation brief examines the addition of Section 501(r) to the Internal Revenue Code under the Affordable Care Act (ACA), which sets out new requirements for not-for-profit, tax-exempt hospitals.

Tax Subsidies for Individuals and Families Who Purchase Coverage Through State Health Insurance Exchanges

Categories: Health Insurance, Tax Policy

Posted on December 9, 2010

This Implementation Brief Includes Tax Subsidy Amendments Passed by the Senate as of December 9, 2010.

The Affordable Care Act (ACA) establishes a refundable tax credit for individuals without affordable employer coverage and ineligible for Medicaid:

Tax Credits for Small Employers

Categories: Tax Policy

Posted on May 26, 2010

The Act provides a small-employer tax credit available in two phases: the 2010-2013 time period, and the time period that begins with the establishment of state health insurance exchanges in 2014 and beyond.