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April 18, 2011

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.

Free-Choice Vouchers

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  This voucher requirement has been repealed (H.R. 1473, “Department of Defense and Full-Year Continuing Appropriations Act”).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  This aspect of the PPACA has been repealed.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”]

Effective Date

Both of these provisions are effective as though they were never included in the PPACA.

 

The information contained herein is not intended to be legal, accounting, or other professional advice, nor are these comments directed to specific situations. The information contained herein is provided as general guidance and may be affected by changes in law or regulation. This information is not intended to replace or substitute for accounting or other professional advice. You must consult your own attorney or tax advisor for assistance in specific situations. This information is provided as-is, with no warranties of any kind. CBIZ shall not be liable for any damages whatsoever in connection with its use and assumes no obligation to inform the reader of any changes in laws or other factors that could affect the information contained herein. As required by U.S. Treasury rules, we inform you that, unless expressly stated otherwise, any U.S. federal tax advice contained herein is not intended or written to be used, and cannot be used, by any person for the purpose of avoiding any penalties that may be imposed by the Internal Revenue Service.

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