December 20, 2017 from Cigna
Tax Reform
Bill Includes Repeal of Individual Mandate Beginning in 2019
On
Dec. 20, Congress passed the Tax
Cuts and Jobs Act, which makes significant changes to individual and
corporate provisions of the U.S. tax code, including a reduction in the
corporate tax rate to 21%, down from 35%, beginning in 2018. The bill includes
permanent effective repeal of the Affordable Care Act (ACA) individual mandate,
requiring individuals to purchase and maintain health coverage, by zeroing out
the penalty beginning in 2019. For 2018, most individuals are still required to
maintain coverage or pay a penalty when they file their 2018 federal income tax
return.
The
bill was negotiated by a conference committee comprised of representatives from
both the Senate and House after each chamber passed their own versions of tax
reform. The final bill was passed 51-48 by the Senate and 224-201 by the House
before being sent to the President. President Trump is expected to sign the
bill into law soon.
The
bill also changes how certain tax thresholds will be indexed for inflation.
Affected provisions, including the ACA “Cadillac” Tax (scheduled to take effect
in 2020), will now be indexed to the Chained Consumer Price Index (CPI) instead
of the regular CPI (the previous metric). That change makes it likely that more
employer-sponsored plans would trigger the Cadillac tax sooner.
