ALERT: USA: House Passes American Health Care Act

The following information was provided to us by Asinta’s Partner in the United States, Alliant.

House Passes American Health Care Act; Still a Long Road to Repeal and Replace

On May 4, 2017,  the House of Representative passed the American Health Care Act, the legislation proposed to repeal and replace parts of the Affordable Care Act (ACA). The AHCA in its final iteration includes the following provisions:

  • Individual and Employer Shared Responsibility Penalties: Eliminates ACA penalties for both the individual and employer mandate for any penalties payable for the 2015 calendar year and beyond; creates a late enrollment penalty on individuals who do not maintain continuous coverage
  • ACA Taxes: Eliminates most ACA taxes by 2017
  • Health FSAs: Repeals the H-FSA salary reduction election limit and requirement that OTC medications have RX to be reimbursable
  • Cost of Coverage: Increases age rating ratios from 1:3 to 1:5 in the individual and small group markets and allows application for higher ratio
  • Medicaid: Ends the ACA’s optional state Medicaid expansion and imposes either a block grant or per capita caps on Medicaid
  • Tax Credits: Extends the ACA premium tax credit through 2019; in 2020 transitions to a fixed dollar tax credit based on age and phases out for higher wage earners
  • Cost Sharing Reductions in Exchange: Repeals ACA cost sharing reductions available to individuals with incomes between 100% and 250% of the Federal Poverty Level by 2019
  • Federal Invisible Risk-Sharing Program: Provides reinsurance for individual market insurers for high-cost enrollees paid from Treasury
  • State Waivers:
    • Allows states to waive the ACA’s essential health benefits requirements
    • Allows states to obtain waiver to individually underwrite coverage in lieu of late enrollment penalty
    • Allows states to obtain waiver to increase age rating ratio
  • State Risk Pools: Provides fund of $138 billion dollars for state risk pools for individuals with pre-existing conditions and other high cost consumers

See our prior Alerts for more in depth discussion of the bill’s provisions.

What Happens Now?

The AHCA will now move to the Senate where its fate is uncertain. As with the process in the House, both conservative and moderate Republicans have reservations about the bill. In addition, the CBO has not yet scored the revised version of the bill and it will be subject to the strict budget reconciliation rules. Those rules limit the bill’s provisions to items related to taxes and spending. Some of the key provisions that led to the bill’s passage today arguably do not comply with those rules.

Employer Action Items

Employers should become generally familiar with the provisions of the AHCA that would directly impact their benefit plans and operations. In the meantime, they should wait and watch to see what happens in the Senate. We will continue to monitor this legislation closely and communicate any developments.

 

Thanks again to Alliant for providing us with this information. You can read Alliant’s original article here and keep up to date on this constantly developing issue via Alliant’s Hot Topics page.

Have a question about employee benefits in the United States? Get in touch with Asinta Partner, Alliant, via their contact page.