Obamacare Repeal Bill Unveiled - American Society of Employers - Kevin Marrs

Obamacare Repeal Bill Unveiled

Earlier this week, House Republicans introduced legislation that seeks to repeal and replace the Affordable Care Act (ACA), President Obama’s signature health care law.  Released Monday night by top Republicans on the Energy and Commerce Committee and the Ways and Means Committee, the bill will, among other things, scrap the individual mandate.  It would also end the requirement that large employers offer insurance to their employees or pay a penalty.

 

While changes to the bill are likely, what is known about the American Health Care Act (AHCA) is as follows:

·       It effectively ends the individual mandate requiring Americans to buy healthcare and likewise eliminates the requirement that employers with 50 or more employees offer insurance to their employees.

·       It seeks to expand the use of Health Savings Accounts (or HSAs) by dramatically increasing contribution limits.  Allowed contributions will reach as high as $13,000 for a family.  It also allows over-the-counter medications to be considered qualifying expenses for HSAs.

·       The proposed bill would provide tax credits (obtained in advance) that people could use to purchase insurance.  Under the Ways and Means Committee version, the credits are adjusted by age.  For example, a 20 year would be eligible for a $2000 tax credit, and someone over 60 would be eligible for $4,000.  The credits would be additive for a family and capped at $14,000. The credits grow over time by CPI+1. The credits are available in full to those making $75,000 per year ($150,000 joint filers). The credit phases out by $100 for every $1,000 in income higher than those thresholds.

·       It will maintain the ACA provision that allows children to stay on their parents’ health insurance until age 26.

·       Essential minimum coverage will end by the end of 2019.

·       Age-based premiums will increase from a 3 times higher ratio to a 5 times higher ratio compared to younger people.

·       The bill also provides that consumers who maintain continuous coverage couldn’t be denied insurance because of pre-existing conditions.

·       Employers will still have to report the value of the health care benefit on the W-2.

·       It would reduce the itemized medical expense hurdle from 10% of adjusted gross income to 7.5%.

·       Medicare surtax for high earners and medical device tax would be eliminated in 2018.

·       Medicaid expansion would be halted in 2020.

 

Still up for consideration, though not making the initial cut for the bill, is the elimination of the Cadillac Tax (which was delayed until 2025) and whether a cap on tax free employer-provided benefits would be instituted.  If the latter was instituted, payroll taxes would likely be assessed to the excess, and it would have a major impact on how employers provide such benefits.

 

If the employer mandate is dropped, it is speculated that employers may likely offer more hours to part-time employees.  Insurers and employers will have to determine the amount of hours worked to qualify for healthcare benefits.  The ACA rule of 30 hours per week or more would no longer apply.

 

Where do we go from here?  It is not surprising that Democrats are not happy with the bill.  Senate Minority Leader, Chuck Schumer (D., N.Y.) tweeted late Monday that, “Trumpcare doesn’t replace the Affordable Care Act - it forces millions of Americans to pay more for less care.”  Even some top Republicans have their concerns.  Some have argued that the plan does not go far enough to repeal the Affordable Care Act, while others are concerned about the costs which is largely unknown at this point.

 

In addition, several Republicans in the Senate expressed concern over changes to Medicaid.  In a letter to Senate Majority Leader Mitch McConnell, they cautioned Republicans against passing a plan that would drop people from the Medicaid rolls.

 

From here the Energy and Commerce and Ways and Means Committees will examine their portions of the bill.  The bill must then go to the Budget Committee and the Rules Committee before heading to the full House.  The law would be passed through a budget reconciliation process, the same way the ACA was initially passed.   However, it appears that the architecture of a new health law is making its way through government.

 

The American Society of Employers will watch closely for developments as they occur.

 

Sources:  Forbes: http://www.forbes.com/sites/kellyphillipserb/2017/03/06/a-quick-look-at-the-gop-plan-to-repeal-replace-obamacare/#17fe2ea236f3; NBC News: http://www.nbcnews.com/politics/congress/republicans-unveil-obamacare-replacement-bill-scrapping-individual-mandate-n729871

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