President Trump’s New Tax Plan May Affect The Health Care Market As We Know It
Earlier this month, we learned that President Trump attempted to yet again repeal and replace the Affordable Care Act. This time it worked with the House passing the American Health Care Act, as amended, by the slimmest of margins. One aspect of the ACA that has kept Trump vocal is that of the ACA-mandated taxes attached to the AHCA. His plans for eliminating those ACA mandated taxes have had one half of the population cheering and the other half questioning what will happen once that money is no longer generated. As merely one piece of his tax reform puzzle, it’s still quite an important piece that may affect Americans the most, as well as their health care.
The Fiscal Times published an article detailing Trump’s new tax plan, and what it can mean for Americans. The “Winners” if approved will undoubtedly be the societal upper crust, but there’s more to it than that. Under the applicable large employers must offer minimum essential coverage to at least 95% of its full-time employees or full-time equivalents.
If employees purchase their healthcare through the ACA’s Health Insurance Marketplace and it’s deemed unaffordable, if income-eligible, they may be eligible for a Premium Tax Credit. This subsidy is indirectly financed by the penalty being picked up by their employer (if they meet a certain size) should they not have provided an adequate healthcare offering. Trump’s plan would eliminate that rule, where larger employers would no longer be required to pay for those subsidies for employees’ premium payments. Per The Fiscal Times, it’s “a break worth an estimated $236 billion in 2018, deductions for state and local taxes, worth about $63.3 billion.”
While Trump has cast the ACA-related taxes and penalties as an unnecessary evil, what about the net result of his desired tax plan: Favoring larger (and generally wealthier) companies by allowing them to bypass employer contributions. That can not only result in the creation of a large deficit (to the tune of $236 billion), but it also leaves employees searching for ways to afford their health care—a problem that does not appear to be readily fixable by Trump’s proposed move toward Health Savings Accounts.
With potential tax breaks primarily for the wealthy aside, this particular piece of President Trump’s tax plan will hurt the poorest Americans.
To learn more about ACA compliance in 2021, click here.
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