HRB 34 - Repeal of Free-Choice Vouchers and Form 1099 Reporting
Released April 18, 2011I Download as a PDF April 18, 2011 --
Two laws have recently been passed that impact the Patient Protection and Affordable Care Act (PPACA). Both laws relate to the repeal of certain aspects of health care reform law. One law relates to the repeal of the free-choice voucher provision; and, the second law repeals the Form 1099 reporting requirement.
As background, the PPACA would have required, beginning in 2014, that if certain conditions are met, the employer would have had to pay a voucher to allow an employee to purchase health coverage through an Exchange (according to the PPACA, states would be required to establish Exchanges by 2014). This would be true if the cost of health coverage through the Exchange would be more cost-effective than that which could be obtained from the employer, and as long as the employee meets certain financial criteria. This voucher requirement has been repealed (H.R. 1473, “Department of Defense and Full-Year Continuing Appropriations Act”).
The repeal of the voucher requirement does not impact the tax penalty that could be imposed on certain employers, beginning in 2014. The tax penalty would be imposed if the employer offers no health coverage, or inadequate coverage, or if the employer offers minimum essential coverage, but the employee could obtain coverage more cost-effectively through Exchanges.
Form 1099 Reporting Requirement
Secondly, beginning in 2012, the PPACA would have required businesses that pay $600 or more for goods and/or services to a single payee, whether a corporation or otherwise, to file a Form 1099, reporting the payments (see Expanded 1099 Reporting Requirements for 2012 and Call for Public Comment). Historically, only services have been subject to Form 1099 reporting, and payments to corporations were exempt. Reporting the payments for goods was added, however, as part of PPACA as a means of raising revenue to help offset the costs of other reform provisions. This aspect of the PPACA has been repealed. [Public Law 112-9 (H. R. 4), “Comprehensive 1099 Taxpayer Protection and Repayment of Exchange Subsidy Overpayments Act of 2011”]
Both of these provisions are effective as though they were never included in the PPACA.
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