IRS Continues to Implement Health Reform Law

While challenges to the 2010 health care reform law continue to work their way through the courts, various government agencies continue work on implementing the law.  One area that is significantly impacted by the law is the federal tax system. According to a report from the Department of Treasury, the Patient Protection and Affordable Care Act (P.L 111-148) and the Health Care and Education Reconciliation Act (P.L. 111-152), collectively known as the Affordable Care Act (ACA), include the largest set of tax law changes in 20 years.

The ACA contains $438 billion worth of revenue provisions in the form of new taxes and fees. It also contains credits that provide incentives for medical research and for businesses to offer employees health care insurance.

At least 42 of the ACA provisions add to or amend the Internal Revenue Code, according to the Treasury report, and at least eight require the IRS to build new tax administration processes that do not currently exist. These provisions provide incentives and tax breaks to individuals and small businesses to offset health care expenses. They also impose penalties, administered through the tax code, for individuals and businesses that do not obtain health coverage for themselves or their employees. Other provisions raise revenue to help pay for the overall cost of health insurance reform.

In June 2010, the IRS created a new organization called the “Associate Chief Information Officer Affordable Care Act – Program Management Office” to ensure successful delivery of the required new systems under ACA. Among other tasks, the Program Management Office is improving the IRS’  information technology (IT) systems to implement the ACA provisions that will assist taxpayers regarding insurance premium subsidies and tax credits needed to cover the cost of their health care coverage. IT systems also are being updated to provide the capability to administer multiple tax provisions designed to raise revenue to offset the cost of health care reform.

While the Treasury report highlighted the work of the Program Management Office so far, it recommended that the office’s governance plan be updated to include escalation procedures for unresolved issues or critical decisions.