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May 9, 2017

We know that many of you have been wondering how the ACA will impact you with the new Administration so we wanted to give you a quick update!

On May 4, 2017, members of the U.S. House of Representatives voted 217-213 to pass the American Health Care Act (AHCA), after it had been amended several times. The AHCA is the proposed legislation to repeal and replace the Affordable Care Act (ACA). The AHCA will only need a simple majority vote in the Senate to pass. If it passes both the House and the Senate, the AHCA would then go to President Donald Trump to be signed into law.  

What does this mean to Employers?  

ACA Provisions Not Impacted by the AHCA:

  • Cost-sharing limits on essential health benefits (EHBs) for non-grandfathered plans (currently $7,150 for self-only coverage and $14,300 for family coverage)
  • Prohibition on lifetime and annual limits for EHBs
  • Requirements to cover pre-existing conditions
  • Coverage for adult children up to age 26
  • Guaranteed availability and renewability of coverage
  • Nondiscrimination rules (on the basis of race, nationality, disability, age or sex)
  • Prohibition on health status underwriting
  • Key Items that WILL be Impacted by the AHCA:
  • Repealing the Employer and Individual Mandates:
  • The AHCA would reduce the penalties imposed under these provisions to zero beginning in 2016, effectively repealing both mandates.

AHCA would allow issuers to add a 30 percent late enrollment surcharge to the premium cost for any applicants that had a lapse in coverage for greater than 63 days during the previous 12 months.

The MacArthur amendment preserves protections for people with pre-existing conditions while giving states greater flexibility to lower premiums and stabilize the insurance market. This includes an option for states to obtain limited waivers from certain federal standards, in an effort to lower premiums and expand the number of insured.

Health Savings Accounts (HSA’s) - The AHCA would nearly double the amount Americans can contribute to their accounts, which will give greater choice and flexibility in purchasing coverage.

The HSA contribution limit for 2017 is $3,400 for self only coverage and $6,750 for family coverage.

Beginning in 2018, the AHCA would allow HSA contributions up to the maximum out-of-pocket limits allowed by law (at least $6,550 for self-only coverage and $13,100 for family coverage).

Tax Changes - The AHCA is said to provide relief from many of the ACA’s tax provisions. Refundable tax credits are a significant component of the AHCA, designed to give people who don't receive health care at work the same tax benefits as those who do so they can purchase the kind of coverage that is right for their family.

The affected tax provisions include the following:

  • Cadillac Tax - The AHCA would change the effective date of the tax, so that it would apply only for taxable periods beginning after Dec. 31, 2025
  • HSA OTC Meds – AHCA would remove the restriction on HSA’s for Over the Counter medications
  • HSA Withdrawals - Lower the increased tax on withdrawals from HSAs
  • Health Flexible Spending Account limits (FSAs) - The AHCA would repeal the limitation on health FSA contributions for taxable years beginning in 2017
  • Additional Medicare Tax - The AHCA would repeal this additional Medicare tax beginning in 2023.

Medicaid - The AHCA would repeal the ACA’s Medicaid expansion, and make certain other changes aimed at modernizing and strengthening the Medicaid program.

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