President Signs Bill to Repeal 3% Government Payment Tax Withholding Provision, Revise Medicaid Eligibility Standard
On November 21, 2011, President Obama signed into law of H.R. 674, which repeals a requirement scheduled to take effect in 2013 that the government withhold 3% of certain payments made to private contractors – including Medicare providers -- as a credit against the contractor’s income tax. The law also amends the Affordable Care Act’s (ACA) definition of modified adjusted gross income for purposes of determining eligibility for certain healthcare-related programs. Specifically, the law tightens Medicaid eligibility standards by providing that modified adjusted gross income includes both taxable and non-taxable Social Security benefits to align the definition with other federal subsidy programs.
