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A Pound of Cure: Preparing for the ACA's 2014 Deadline

Joanne S. Barry

A little over two years ago, I wrote about the important role that CPAs will play in translating the provisions of Obama's healthcare reform law, not only to their clients, but also to the public. Since that time, some of the law's provisions have gone into effect, but the legislation's centerpiece—the individual mandate that every American have health insurance or be charged a penalty administered by the IRS—was challenged on the grounds that the mandate is unconstitutional. That left most Americans, including employers and the professionals who advise them, to play a waiting game that ended on June 28, when the United States Supreme Court ruled that the Affordable Care Act (ACA) is constitutional—and it is constitutional because it is a tax.

So although nothing has changed, everything has changed. While the law, as it was adopted, was always going to rely on taxing high-wage earners to pay for some of the law's cost—2013 comes with a new tax on interest income for individuals who earn more than $200,000 ($250,000 for married couples filing jointly) annually—what is different is that the 2014 mandate is actually going to happen (although the presidential election does bring with it some level of continuing uncertainty).

The net costs—the combined effects on federal revenues and mandatory spending—reflect gross additional costs of $1.5 trillion for Medicaid, the Children's Health Insurance Program, tax credits, and other subsidies for the purchase of health insurance through newly established exchanges, as well as tax credits for small employers, according to the Congressional Budget Office (CBO); they are offset, in part, by about $0.4 trillion in receipts from penalty payments, the new excise tax on high-premium insurance plans (set to go into effect in 2018), and other budgetary effects (mostly increases in tax revenues). Shortly after the Supreme Court handed down its decision, the CBO announced that it would assess the effects of the court's ruling on the ACA (due to be released after this issue went to press).

Get Ready

Those who were preparing for the changes the law requires by 2014 are in a better place than those who waited on the Supreme Court's decision: right now there are plenty of employers scrambling to find out what exactly they have to do to prepare, not only as individuals but as CFOs, CEOs, human resource managers, and compliance officers—and most of them will be looking to their most trusted advisor to figure it out, their CPA. With the availability of healthcare exchanges, and certain economic incentives within the law, the ACA has the potential to result in fewer companies offering health insurance packages to their employees, depending on the size of their workforce and their industry, which could lead to a more cost-effective arrangement for the employer and a higer salary for the employee. But such speculation doesn't even scratch the surface of the effect the law might have on American businesses and what CPAs need to know to appropriately advise their clients or their colleagues.

To prepare these advisors, the NYSSCPA has multiple opportunities for CPAs and the press to learn about the provisions of the law and how to prepare for it. A free September 5 Breakfast Briefing, “SCOTUS Approved: The Affordable Care Act: What It Means for Your Clients and Business,” will provide a high-level discussion moderated by Trudy Lieberman, contributing editor of the Columbia Journalism Review, focusing on compliance issues and tax planning for CPAs and their clients. The Foundation for Accounting Education's (FAE) upcoming Healthcare Conference on September 13 is a daylong event in Manhattan, also available as a webcast, that will provide technical guidance so CPAs and other financial professionals can gain a deeper understanding of the law and its implications for their clients and themselves. Ready or not, change is on its way.

CPAs of every professional discipline—taxation, audit, industry, nonprofit, and government—will be called upon by their employers or clients to help comply with the ACA. Not only will CPAs need to understand the implications of these changes, but they'll also need to translate them for clients and colleagues in their own organizations. Decide now what kind of CPA you want to be: the CPA who is ahead of the curve, or the CPA who spends the majority of 2013 playing catch-up. Whichever camp you are in, the NYSSCPA and FAE will help you get to where you need to be.

Joanne S. Barry. Publisher. The CPA Journal, Executive Director, NYSSCPA, jbarry@nysscpa.org.

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