The fight going forward is going to be over the reoriented subsidies and Medicaid. There is nothing explicit that allows states to waive out of anything new but the general waiver requirements process has been expanded.
The greatly anticipated (and robustly debated) Senate Republican health reform overhaul – the “Better Care Reconciliation Act of 2017” – has finally been released. The politics of the legislation are unclear, as GOP leaders have virtually no margin for error in a vote that Majority Leader Mitch McConnell intends to push by the end of next week. They may lose only two votes, assuming Vice President Mike Pence will cast the deciding party-line vote.
Employers and Plan Sponsors will be pleased to note that the legislation leaves the employer/employee “exclusion” from taxation on group health benefits untouched. Taxing employee premiums is a major threat during this process as Congress looks to increase revenue for the measure. We’re also gratified that the “Cadillac Tax” on high cost health plans would continue to be delayed until 2025.
The House-passed American Health Care Act also included a provision that would delay implementation of the tax until 2025 (from the current law which would implement the tax in 2018).
- Zeros out individual and employer mandates.
- Modifies but keeps the individual credits; ties credits to age bands (5) and reduces eligibility to families under 350% of poverty line (from 400 before), but if you have access to employer coverage, you are ineligible with no requirement that the employer coverage be “affordable.”
- Eliminates small business tax credit regime for health care insurance after 12/31/19 AND between now and then small business health plans are ineligible for the credit if they cover abortion services.
- Generally repeals all of the taxes in effect after 12/31/17. The Medicare excise tax does not go away until after 12/31/2022, but net investment tax goes away effective 12/31/16.
- ACA HSA and FSA limits repealed so back to the $5,000 caps.
- Other HSA reforms are the same as in AHCA – increases the maximum contribution (to be equal to the plans out of pocket limits); allows spousal and catch-up contributions; and allows expenses incurred within 60 days of establishing an HSA to be covered. Does not deal with on-site medical clinic or telemedicine issue.
- Eliminates federal MLR rebate regime after next year, but requires each State to establish its own MLR regime with rebates.
- Most Significant Development: allows for the establishment of association health plans as large group plans for small businesses/individuals. These plans would be exempt from the community rating and essential benefit requirements imposed on small group and individual plans.
A chart comparing the Affordable Care Act to the House and Senate bill is available here for your reference. Should you have any questions or concerns, please contact your Account Manager or Executive.