Thursday morning the Senate publicly released a discussion draft of its version of a healthcare bill to repeal the Affordable Care Act. The tax provisions in the bill are materially the same as those in the bill the House passed in May (which we covered here and here), the differences mainly relate to effective dates for the various provisions, which generally vary by only a year (we expect these effective dates to be the subject of negotiation between the House and Senate, especially depending on the CBO’s analysis of this Senate draft).
Notably, the Senate draft retains the House bill’s retroactive repeal (effective for taxable years starting after December 31, 2016) of the 3.8% tax on certain net investment income under Section 1411 of the Code. The Senate draft delays by one year, however, the repeal of the 0.9% Medicare surtax on wages above certain amounts, which is effective for taxable years after December 31, 2023 under the Senate bill. The Senate bill also delays the imposition of the excise tax on “Cadillac plans” by an extra year, to 2026.
The Senate bill retains the concept under current law of means-tested tax credits for the purchase of health insurance, as opposed to the House bill, which provides a flat credit based on age. The tax credits under the Senate bill are generally less generous than those under current law.