House Health Committees Advance GOP’s ACA Repeal/Replace Bill
While in Washington last week participating in the ECFC conference, I attended the House Ways & Means mark-up into the early morning Thursday and the Energy & Commerce mark-up Thursday afternoon. The Committees advanced their respective pieces of Fiscal Year 2017 budget reconciliation legislation, which repeals and replaces the Affordable Care Act (ACA).
There is much uncertainty on the path forward, we will be watching developments and I will be back in Washington in April.
-Lisa Allen, VP Regulatory Affairs
On Monday, March 13, the Congressional Budget Office (CBO) and the staff of the Joint Committee on Taxation (JCT) produced an estimate of the budgetary effects of the American Health Care Act.
CBO and JCT estimate that enacting the legislation proposed by congressional Republicans would reduce federal deficits by $337 billion over the 2017-2026 period. The largest savings would come from reductions in outlays for Medicaid, which is estimated to be approximately $800 billion over the budget window, as well as from the elimination of the Affordable Care Act’s (ACA’s) subsidies for nongroup health insurance.
CBO and JCT estimate that, in 2018, 14 million more people would be uninsured under the legislation than under current law with 24 million more being uninsured by 2026. Commercial market premiums would increase slightly over the next two years, primarily as a result of the ACA’s individual mandate being repealed. By 2026, private insurance premiums would be 10 percent lower than under the ACA.
A summary of the major provisions in the bill as it is currently written:
- Eliminate the ACA’s individual and employer mandates, although it encourages continuous coverage by allowing insurance companies to implement a 30 percent premium surcharge for those who do not maintain continuous coverage for at least 63 consecutive days
- Provide coverage for individuals with a pre-existing condition only if individuals maintain continuous coverage
- Allow children to stay on their parents insurance plan up until the age of 26
- Implement a Patient and State Stability Fund totaling $100 billion over 10 years (intended to be used for high-risk enrollees and premium stabilization efforts)
- Maintain the ACA’s Essential Health Benefits, but eliminate the “actuarial value” requirement of 60% (will be reduced to 56% under the proposed Trump regulations) for the metal tiers
- Eliminate the ACA’s Prevention and Public Health Fund beginning in 2019 (any remaining unobligated funds at the end of FY 2018 are to be rescinded)
- Increase the contribution limit for Health Savings Accounts (HSAs) beginning January 1, 2018 equal to the maximum on the sum of the annual deductible and out-of-pocket expenses allowed under a high deductible plan
- Increase Community Health Center Funding with an additional $422,000,000 for FY 2017
- Phase-out Medicaid expansion under the ACA by January 1, 2020 (states would still be permitted to offer coverage under Medicaid expansion until January 1, 2020)
- Convert Medicaid program to a per capita cap system
- Eliminate the ACA’s current subsidies and replace with refundable tax credits based on age instead of income beginning January 1, 2020. These credits would range from between $2,000 and $4,000 per year.
- Under age 30: $2,000
- Between 30 and 39: $2,500
- Between 40 and 49: $3,000
- Between 50 and 59: $3,500
- Over age 60: $4,000
- As noted in the Ways and Means Committee section-by-section summary, these credits are additive for a family (capped at $14,000). The credits grow over time by CPI+1. The credits are available in full to those making $75,000 annually ($150,000 for joint filers). The credit phases out by $100 for every $1,000 in income higher than those thresholds.
- Eliminate the ACA’s taxes
- Repeal of the ACA’s medical device tax
- Repeal of the ACA’s health insurance tax
- Repeal of the ACA’s tax on over-the-counter medications beginning January 1, 2018
- Repeal of the ACA’s .9% Medicare surtax on taxpayer income over $200,000 for individuals/$250,000 for couples
- Repeal of the ACA’s 10% excise tax on indoor tanning beginning January 1, 2018
- Repeal of the ACA’s Health Flexible Spending Arrangement (FSA) limit beginning January 1, 2018
- Delay the effective date of the ACA’s 40% excise tax (aka Cadillac Tax) until 2025
What does this mean for 1095-C reporting? Nothing yet!
If AHCA passes, reporting will be required at least until 2020. While offers of coverage will not necessarily be required, due to the continuation of the subsidy until 2020, reporting on employee enrollment in coverage would still be required. Anticipating a revised 1095-C or quite possibly a revised W-2 for future reporting. The IRS Information Reporting Program Advisory Board (IRPAC), which I am a member, has requested that any revisions be provided to my sub-group Employer Information Returns/Burden Reduction (EIRBR) prior to public release for comment.
If you should have any questions, please do not hesitate to reach out to your Senior Benefits Consultant or myself directly at 1-800-836-0026 x230 or 585-415-0448 or email at email@example.com.