Important Pending Tax Legislation and New IRS Guidance

December 18, 2015

Important Tax Legislation

Congress is working on finalizing the appropriations bill, H.R. 2029, which is expected to pass this week and be signed by the President next week. The final bill is expected to include two important tax benefit changes:

  • Provisions delaying the Cadillac tax for two years, making the tax payment deductible, and instituting a suitability study to determine the benchmark for age and gender adjustments.
  • A provision providing an increase in the limit for employer-provided transit benefits to match the limit for parking benefits. The increase would be retroactive to January 1, 2015, but would not have an expiration date as past parity legislation did, and therefore would be a permanent fix going forward.

We will update you with more details on these provisions and any other important benefit changes early in 2016.

UPDATE: On Friday, December 18th, Congress passed and the President quickly signed into law, the “Consolidated Appropriations Act, 2016”, which includes the provisions noted above. Stay tuned for additional details.

New IRS Guidance

Earlier this week, the IRS published Notice 2015-87 with in-depth guidance on provisions of the ACA and their impact on the various arrangements for providing employer-sponsored health care. This Notice includes new guidance on HRAs, affordability calculations (including flex contributions, cash-out options, and fringe benefits under the SCA or DRBA), indexed 4980H penalties, COBRA rules for FSAs (including carryover funds), and other related matters.

We will provide detailed information on the IRS Notice early in 2016.