Much of the coverage of the repeal effort fails to discuss two important aspects – the impact on employers and how much the Senate will need to change the law if it is to pass.
The vote was incredibly close in the House. 8% of House Republicans voted against the Bill. If that occurs in the Senate there is no way the Bill will pass. So, expect the Senate to rewrite much of the Bill.
What about Pre-existing Conditions? What about Medicaid? Until the Senate has their turn rewriting the law all provisions are up for negotiation. For now, employers should have an idea of the major provisions in the Bill. However, they should take no action yet. Until this legislation is passed by the U.S. Senate and signed into law by President Trump, all existing ACA requirements remain in effect, including penalties for noncompliance.
Notable Provisions of the American Health Care Act
If signed into law, the American Health Care Act would, among other changes, make the following revisions to key features of the ACA over the next three years:
- “Pay or Play”: Penalties for noncompliance with the “pay or play” coverage requirement (which mandates, in general, that employers with 50 or more full-time employees [including full-time equivalent employees] must offer affordable, minimum value coverage to their full-time employees, or pay a penalty tax) are zeroed out. However, the Form 1094 & 1095 reporting requirements are unchanged by the bill.
- Individual Mandate: Penalties for noncompliance with the individual mandate are zeroed out, effectively repealing the mandate. In its place, the bill requires issuers in the individual or small group markets to impose a 30% penalty on the health insurance premiums of individuals who do not maintain continuous health insurance coverage.
- HSA Contribution Limits: Limits on contributions to health savings accounts (HSAs) are increased to equal the inflation-adjusted annual out-of-pocket expenses limitation imposed on high deductible health plans (currently $6,550 (self-only coverage)/$13,100 (family coverage)).
- Health FSA Contribution Limits: Limits on contributions to health flexible spending arrangements (health FSAs) are eliminated.
- Tax Credits for Individual Coverage: Replaces the ACA’s premium tax credits for individual market coverage with advanceable, refundable tax credits adjusted for both age and income.
- Market Reforms: Permits states to seek waivers from the ACA’s essential health benefits and age and health status community rating requirements.
- Medicaid: Allows states to elect to receive federal Medicaid funding via a block grant or per capita allotment, and alters the ACA’s Medicaid expansion.
Click here to read the American Health Care Act in its entirety.
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