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Regulatory Roundup August 2022

September 07, 2022

August saw a range of legislative updates, stretching from student loan cancellations to updated ACA affordability rates.

Blog Post

As the dog days of summer come to a close, the month of August saw multiple legislative updates from Congress, the White House, the Internal Revenue Service (IRS), and a team of federal agencies. First was the passage of the new Inflation Reduction Act, which included language aimed at stemming the country’s current inflation rates and fighting global climate change. Next was the White House’s partial cancellation of student debt and extension of the current pause on student loan repayments. Finally, the Affordable Care Act (ACA) received a pair of updates: a new affordability rate from the IRS and contraceptive guidance from the Departments of Health and Human Services, Labor, and Treasury. Check out each of these developments below in this month’s Regulatory Roundup.

The Inflation Reduction Act of 2022

Due to the country’s current economic inflation, Congress passed H.R.5376 also known as The Inflation Reduction Act of 2022. The new law uses multiple tactics to achieve its namesake, including an alternate corporate income tax for companies earning $1 billion or more and raising the maximum total credit available within the upcoming Qualified Small Business Payroll Tax Credit for Increasing Research Activities. In addition to these measures, the law also looks to help combat global climate change by allocating hundreds of billions of dollars towards energy security and climate change programs over the next decade.

Student Debt Relief

To provide further economic relief, the White House also announced the cancellation of substantial amounts of federal student loan debt. Borrowers with an annual salary of less than $125,000 individually, or $250,000 as either a couple or head-of-household, would be eligible to have up to $10,000 in regular student loan debt cancelled, as well as up to $20,000 in Pell Grant debt cancelled. The White House coupled this announcement with a final extension to the current pause on student loan repayments through the end of 2022 and a list of efforts focused on reforming the country’s current student loan system. These efforts include, among others, reducing the maximum rate on income-based repayment plans from 10% of discretionary income to 5% and reducing the time requirements for loan forgiveness eligibility from 20 years to 10, provided the remaining loan amount is $12,000 or less when a borrower reaches that 10-year mark.

New ACA Affordability Rates

The IRS also announced in August the new maximum rate of employee contributions for self-only care would decrease for the 2023 calendar plan year. Per Revenue Procedure 2022-34, for any employer-sponsored health coverage to be considered “affordable” it can’t require employee contributions to be over 9.12% of the employee’s household income for the taxable year. This is a decrease from the prior limit of 9.61%. To assist applicable large employers (ALEs) who don’t know an employee’s total household income, three safe harbors are also available for calculating a coverage’s affordability. These harbors include Form W-2 wages, the employee’s Rate of Pay, or the Federal Poverty Level (FPL).

ACA Contraceptive Coverages

The second ACA update in August came from a joint effort by the Departments of Health and Human Services, Labor, and Treasury to clarify the act’s policy on contraceptive coverage. Together, the three agencies confirmed the ACA will cover women’s preventative services, including birth control and contraceptive counseling, for all individuals or covered dependents with the ability to reproduce. As such, a Health Savings Account (HSA), Health Flexible Spending Account (FSA), or Health Reimbursement Arrangement (HRA) can reimburse individuals for the cost of over-the-counter contraceptives, provided the cost is not paid or reimbursed by another plan or coverage. If only part of the cost is paid by another plan or coverage, the remaining amount can still be reimbursed by the accounts and arrangements listed above.

Additional Information

Get more details on the compliance updates from August here:

Bookmark our resource library and come back monthly for Regulatory Roundups of tax and compliance alerts you need to know. For any other frequently asked questions or general assistance, refer to our Administrator Support page for support contact information, quick how-to guides or training courses, important PEAK articles, and more. Don't forget to also follow us on FacebookLinkedIn, and Twitter for urgent updates.

This information is provided as a courtesy, may change, and is not intended as legal or tax guidance. Employers with questions or concerns outside the scope of a Payroll Service Provider are encouraged to seek the advice of a qualified CPA, Tax Attorney, or Advisor

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