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U.S. House Passes Health Care Bill. The Senate Now Holds the Cards. | Maryland Benefit Advisors

On May 4, 2017, the U.S. House of Representatives passed legislation to repeal and replace the Affordable Care Act (ACA). An earlier version of the House bill, called the American Health Care Act (AHCA), had been debated in March but was not voted on due to opposition from Democrats and insufficient support from Republicans. This time around, after revisions were made regarding Medicaid funding, coverage of pre-existing conditions, and insurance market reforms, the bill squeaked through on a 217-213 vote.

Yesterday’s House vote was held without waiting for the Congressional Budget Office (CBO) to score the cost and impact of the bill. The AHCA now moves to the Senate for consideration, which will require CBO scoring. The bill’s fate in the Senate is far from certain. Without support from at least 50 of the 52 Senate Republicans, the bill will fail. At this time, at least five of those Senators have given public statements expressing doubts on the House version of the bill.

The primary focus of the AHCA is on funding for Medicaid and other state programs, maintaining stability in the individual insurance markets, and giving individual states more flexibility in opting out of insurance reforms. Also included are a number of provisions offering relief to employers and reducing the scope of requirements on group health plans. Below are highlights of provisions of the most interest to employers.

Employer Highlights:

  • Employer Mandate: The proposed legislation would repeal the ACA’s employer shared responsibility provision, that is the so-called “employer mandate” or “play or pay,” as of 2016. The rules for 2015 would not change, which would still be an issue for certain large employers that did not qualify for transition relief that year.
  • Employer Reporting: The existing rules requiring completion of Forms 1094 and 1095 would continue to apply, although the IRS may have the ability to soften them in the future.
    Taxes and Fees: The Cadillac tax on high-cost health plans would be delayed six years, then take effect in 2026. The PCORI fee would continue as previously scheduled for plan years through September 2019. The additional Medicare tax on high earners would be repealed starting in 2023.
  • Health Plan Requirements: Current ACA rules regarding eligibility for children to age 26, limits on waiting periods, prohibitions against annual or lifetime dollar limits, and most other provisions would continue unchanged. Coverage for pre-existing conditions also would be protected, at least for persons that maintained continuous coverage.
  • Essential Health Benefits (EHBs): The ACA currently requires broad coverage of all EHBs in the small group insurance market (unless grandfathered or grandmothered). The AHCA would give individual states more flexibility in defining EHBs and determining coverage requirements.
  • Health Savings Accounts (HSAs): The annual HSA contribution limits would be increased significantly.
  • Health Flexible Spending Accounts (HFSAs): ACA restrictions regarding over-the-counter medications and the annual benefit cap would be repealed.

The bottom line for employers is this: The proposed AHCA includes many provisions that most employers would welcome as good news, such as relief from the employer mandate, repeal of various health plan fees and taxes, and fewer restrictions on group insurance and benefit plan designs. Those provisions, however, are part of a large piece of legislation that is not likely to pass the Senate without significant modification. Therefore, for now, nothing has changed and employers are advised to continue complying with current law.

Get a section-by-section summary of the bill passed by the House.

Originally published by

Long-Awaited Repeal and Replacement Plan for ACA Unveiled | Maryland Benefit Advisors

On March 6, 2017, the U.S. House of Representatives Ways and Means Committee released a proposed budget reconciliation bill, entitled the American Health Care Act, to replace portions of the Affordable Care Act (ACA). If enacted, the American Health Care Act would provide some relief from provisions of the ACA for employers and make other significant changes to employee benefits. While the proposal is 53 pages long and covers a range of tax and benefit changes, below is a summary of key provisions impacting employers and employee benefits.

Employer and Individual Mandates

The proposal effectively eliminates the employer and individual mandate by zeroing out penalties for an employer’s failure to offer, and an individual’s failure to obtain, minimum essential coverage retroactive to January 1, 2016.

Health Care Related Taxes

The proposal extends the applicable date for the “Cadillac tax” from 2020 to 2025 and repeals the medical device tax, over the counter medication tax, indoor tanning sales tax, and Medicare hospital insurance surtax beginning in 2018.

Reporting Requirements

Because the proposal is through a budget reconciliation process, employer reporting requirements for reporting offers of coverage on employees’ W-2s cannot be repealed; however, the proposal creates a simplified process for employers to report this information that, according to the House Ways and Means Committee’s section-by-section summary, makes the current reporting redundant and allows the  Secretary of the Treasury to cease enforcing reporting that is not needed for taxable purposes.

Contribution Limits

Additionally, the proposal eliminates the cap on contributions to flexible spending accounts (FSAs) and almost doubles the maximum allowable contributions to health savings accounts (HSAs) by allowing contributions of $6,550 for individuals and $13,100 for families beginning in 2018. This aligns the HSA contribution amount with the sum of the annual deductible and out-of-pocket cost expenses permitted under a high deductible health plan. The proposal also allows both spouses to make catch-up contributions to one HSA beginning in 2018.

Patient Protection Provisions

Finally, the proposal retains some key patient protection provisions of the ACA by continuing to prohibit insurers from excluding individuals with pre-existing conditions from obtaining or paying more for coverage and continuing to allow children to stay on their parent’s plan to age 26.

What Employers Should Know Now

We are still in the first round of the new government’s strategy to repeal and replace the ACA. The Congressional Budget Office will next review and score the plan before it goes back to the House and the Senate for full votes before making it to President Trump’s desk for approval. This will take time.

In the interim, the provisions of the ACA still apply. While applicable large employers may not be assessed penalties for failing to offer minimum essential coverage to employees if the proposal is eventually enacted, please note that employers are still obligated to report offers of coverage and should finalize their ACA reporting for the 2016 tax year if they have not completed their e-filing with the IRS (due March 31, 2017).

By Nicole Quinn-Gato, JD
Originally published by