How the Tax Cuts and Jobs Act Could Impact CDH & Employee Benefits
After months of preparation, the U.S. House of Representatives (the “House”) Republican leadership unveiled H.R. 1, the Tax Cuts and Jobs Act (the “Bill”) on November 2, 2017.
If passed, there are several provisions included in the Bill that directly impact the consumer-directed healthcare industry.
House Republicans are confident that the Bill can be passed by the House before Thanksgiving, and U.S. Senate (the “Senate”) Republicans are hopeful to have a draft of the Senate version of the bill released in the next week.
Below is a summary of potential modifications and their effect on the consumer-directed healthcare industry and employee benefits:
Commuter Benefits – Beginning in 2018, employers will not be able to deduct any pre-tax transit or parking amounts. Employees may still receive a tax benefit if these commuter accounts are funded through payroll.
Dependent Care FSAs – Initially, beginning in 2018, the Bill proposed that dependent care FSAs and the exclusions for employer-provided onsite daycare would no longer be available; however, House Republicans, in their first mark-up of the proposed Bill on November 6, 2017, amended the Bill to delay this repeal of dependent care FSAs.
Individual Mandate – Repeal of the individual mandate under the Affordable Care Act is being considered as part of tax reform.
Also of note, below are some provisions that were considered for reform, but that the Bill does not actually propose to change, delay, modify or repeal:
Expansion of HSAs
Repeal of the Cadillac tax
Modification of the annual cap on FSA contributions
Repeal of the prescription requirement for over-the-counter medicines
Modification to the penalty for unqualified HSA distributions
Modification to cap on employer-provided healthcare
Changes to, or limits on, pre-tax contributions to 401(k) and other types of defined contribution plans, commonly known as “Rothification”
I’ll cover this and the other legislative topics that defined benefits dialogue in 2017 — as well as what may be on the horizon — along with Roy Ramthun, President and Founder of HSA Consulting Services, in our upcoming webinar, The Legislative Year in Review, and What to Look For in 2018. I hope you can join us.
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Disclaimer: ConnectYourCare does not provide tax or legal advice. This information is not intended and should not be taken as tax or legal advice. Any tax or legal information in this notice is merely a summary of ConnectYourCare’s understanding and interpretation of some of the current tax regulations and is not exhaustive. You should consult your tax advisor or legal counsel for advice and information concerning your particular situation before making any decisions.