Today, the House was expected to vote on the American Health Care Act. This afternoon, the vote was cancelled so that the White House could continue negotiations with House Republicans to secure their votes.
As last published, the Act includes elimination of the individual and employer mandates by repealing the tax penalties for noncompliance. Key provisions include:
- Repeal of employer tax penalties for large employers who do not offer coverage to employees.
- Increased limits on health FSAs and HSAs.
- Delay of the high cost “Cadillac” plan tax on employer coverage until 2026.
- Repeal of the small business tax credit for providing health insurance.
- Repeal of the 0.9% Medicare surcharge for high income earners.
What stays the same for employers? Parts of the ACA that are not directly part of the federal budget cannot be changed through this budget reconciliation act. For instance, children up to age 26 remain eligible for coverage under their parent’s group health plan and the removal of pre-existing condition limitations remain in place. While larger employer plans will no longer be subject to the employer mandate, some form of reporting will still exist. Employer notice requirements, such as SBCs, remain in effect.
- Repeal of tax penalty for uninsured individuals.
- Replace with a premium surcharge of up to 30% for up to 12 months for new insurance after a greater than 2-month lapse in coverage.
- Repeal of ACA premium tax credit based on an individual’s income and premium costs.
- Replace with tax credits of $2,000 to $14,000 annually based on age, family size, and income level.
- New tax credit applicable for health insurance of the individual’s choice, including policies that would not qualify under the ACA, such as catastrophic-only coverage.
- No tax credit available for policies that include abortion coverage.
- Change of individual premium ratios from 3:1 to 5:1.
- Younger individuals would pay a lower portion of the overall cost of coverage, in the hope that less expensive coverage will attract enrollment of young and healthy who are no longer required to enroll to avoid a penalty.
- Older individuals would pay an increased premium for their coverage, making it harder for older adults to maintain quality individual coverage.
Coverage may still be purchased on the existing healthcare.gov or state exchanges website portals.
- The ACA Medicaid expansion would stop, but states could still receive funding to cover individuals who enroll before 2020.
- Change Medicaid funding to provide states with a per capita allotment and an option to instead receive block grant funding for the non-elderly, non-disabled population.
- States would be allowed to set work requirements for non-disabled adults to be eligible for Medicaid.
We will continue to keep you informed. If you have questions in the meantime, please contact your Keller consultant.