Breaking: House Passes Obamacare Repeal & ReplaceBreaking: House Passes Obamacare Repeal & Replace

In a first step toward repealing and replacing Obamacare ie. Affordable Care Act (ACA), the  House of Representatives narrowly passed the American Health Care Act (AHCA) today by a vote 217-213. Every House Democrat and 20 House Republicans opposed the measure. The bill will now be sent to the U.S. Senate. 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:

SIMILARITIES

  •  Pre-Exissting Conditions Covered: Under the Affordable Care Act, insurance companies are required to cover pre-existing conditions. This is still the case under the AHCA, but the creation of High Risk Pools, funded with $8 billion dollars was an added amendment to the AHCA.  Pools provide coverage if you have been locked out of the individual insurance market because of a pre-existing condition, and are subsidized by a state government. The premium is up to twice as much as individual coverage. Individuals who have a lapse in coverage of more than 63 days will be required to pay a 30 percent premium surcharge for 12 months when coverage is purchased.
  • Adult Coverage to Age 26 Covered: People who are under 26 years old can stay on their parents’ health insurance plan under both the ACA and the AHCA.
  • No Lifetime Cap: People who are under 26 years old can stay on their parents’ health insurance plan under both the ACA and the AHCA.

CHANGES

  • “Pay or Play”: Penalties for noncompliance with the “pay or play” coverage requirement (which mandates, in general, that employers with 50+  FT
    GOP Repeal & replace Provisions

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     employees [including full-time equivalent employees] must offer affordable, minimum value coverage to their full-time employees, or pay a penalty tax) are zeroed outHowever, 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.
  • Essential Health Benefits:   AHCA eliminates the requirement for Essential Health Benefits. The AHCA allows limited policies that are only in case of major illness or injury.
  •  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.

The chart below summarizes some of the significant changes made by the AHCA.

Affordable Care Act (ACA)

American Health Care Act (AHCA)

Mandates

  • Individual mandate
  • Employer mandate on applicable large employers (ALEs)
  • No individual or employer mandate effective retroactive to Jan. 1, 2016
  • Insurers can impose a one year 30% surcharge on consumers with a lapse in continuous coverage (individual and small group market)

Assistance

  • Income-based subsidies for premiums that limit after-subsidy cost to a percent of income
  • Cost sharing reductions for out-of-pocket expenses
  • Age-based refundable tax credits for premiums, phased out for higher incomes
  • No cost sharing reductions for out-of-pocket expenses
  • ACA subsidies phased out after 2019; AHCA credits effective in 2020

Medicaid

  • Matching federal funds to states for anyone who qualifies
  • Expanded eligibility to 138% of poverty level income
  • Federal funds granted to states based on a capped, per-capita basis starting in 2020
  • States can choose to expand Medicaid eligibility, but would receive less federal support for those additional persons

Premium Age Differences

  • 3:1
  • 5:1 (and the MacArthur amendment would allow a higher ratio)

Health Savings Account Limits

  • $3,400/$6,750
  • Contribution limits increased to maximum out-of-pocket limit for HDHP coverage
  • $6,550/$13,100 (effective retroactively to Jan. 1, 2017)

“Cadillac” Tax

  • Cadillac tax on high-cost employer plans implemented in 2020
  •  Cadillac tax on high-cost employer plans delayed until 2026

Other Taxes

  • 3.8% tax on net investment income
  • Limit placed on contributions to flexible spending accounts
  • Annual health insurance provider tax
  • Over-the-counter medication excluded as qualified medical expense
  • 0.9% Medicare tax on individuals with an income higher than $200,000 or families with an income higher than $250,000
  • Repeal of these taxes retroactive to the beginning of 2017 (except for the repeal of the Medicare tax, which would begin in 2023)

Essential Health Benefits

  • Individual and small group plans are required to offer ten essential health benefits
  • Under the MacArthur amendment, individual and small group plans are required to offer the ten essential health benefits, but a waiver option is available
  • Some Medicaid plans are not required to offer mental health and substance abuse benefits

MacArthur Amendment

The following chart summarizes the changes made to the AHCA by the MacArthur amendment.

Insurance Market Provisions

The MacArthur amendment:

  • Reinstates Essential Health Benefits (EHB) as the federal standard (removes ability of states to define EHBs, but see waiver option)
  • Maintains the following provisions of the AHCA:
    • Prohibition on preexisting condition exclusions
    • Prohibition on discrimination based on gender
    • Guaranteed availability and renewability of coverage
    • Coverage of adult children to age 26
    • Community Rating rules (but see waiver option)
Limited Waiver OptionStates may obtain waivers from certain federal standards, in the interest of lowering premiums and expanding the number of enrollees. States could seek waivers from:

  • Essential Health Benefits (states could set their own definition of EHBs for the individual and small group markets starting in 2020, and increase the age rating ratio above 5:1 starting in 2018)
  • Community rating rules, except for the following categories, which are not waivable:
    • Gender
    • Health Status (unless the state has established a high-risk pool or is participating in a federal high risk pool)
Limited Waiver RequirementsStates must explain how the waiver will benefit the insurance market in their state, such as reducing average premiums, increasing enrollment, stabilizing premiums for individuals with pre-existing conditions, or increasing the choice of health plans.,Applications are automatically approved within 60 days unless denied by HHS.

 

As always, please contact us info@medicalsolutiosncorp.com for a compliance review of your benefits offering. Click here to read the American Health Care Act in its entirety.