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IRS Impact of the Patient Protection and Affordable Care Act and the Reconciliation Act of 2010

Rick Skorny

October 21, 2010

Citizen Services – Civil and Government Health Services Group

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• High level of compound complexity

– Political uncertainty – huge legislative challenges coming?

– Technical Impact Bigger than Y2K efforts

– Business Impact Across multiple entity groups – • Individual, Business, Exempt Organizations, State agencies

– Significant state jurisdictional impact • “20-state lawsuit challenging health reform law allowed to proceed”

“Compound Complexity”

Key Complexities of the Affordable Care Act

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Executive Summary – just from an IRS view

1. Develop new excise tax data base and compliance work load selection tools (effective after 12/31/2013)Pg 14, 23, 25

2. Develop system and data base of health insurance providers, policies and premiums to include electronic receipt of information to allocate the annual $8B fee, based on net premiums, among the providers. (after 2013). Pg 31,33

3. The same system could be used for Treasury Patient Centered Outcomes Research Trust Fund ($2/policy) effective after 10/1/2012. System deployed to meet 10/1/2012 date. Pg23

4. Develop system for IRS to disclose income information to HHS/SSA and advise taxpayer of disclosure. (immediate need) Pg 11, 21

5. Develop new Insurance Coverage Compliance program system (new nonmasterfile Health Coverage MF (HCMF) Pg 15, 17

6. Expansion of HCTC (refundable tax credit providing premium assistance) effective 12/31/20137. Pg 9, 108. Modifications of Revenue Accounting Systems (GWA) Pg 14, 23, 25, 31, 339. Modifications to existing systems regarding tax credits, premium assistance, corporate,

partnership and individual income tax returns, and exempt organization forms Pg 13, 25, 27, 28, 30, 35, 37, 40, 42, 44, 47, 48, 49, 51, 52, 53, 56 Forms 1040, 720, 1120, 1065, 990, 941

Note - This list doesn’t begin to address all the other agencies, states, and business entities (reporting requirements, information exchanges)

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• Continue to outline/define the business model

– IRS and many agencies can assist in collecting health care information – Both economic and health information

– Government can help business reduce administrative health care costs

– CIOs and other agencies must work across the Federal/state/local/and business levels to integrate systems – exchange information

“Basic Recommendations”

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Questions/Comments

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Experience. Results.