House Committees Release Proposed Legislation to Repeal and Replace the ACA

UPDATE:

The American Health Care Act (AHCA), which had been proposed on March 6, 2017 to replace the Affordable Care Act (ACA), has been pulled as House Republican leaders did not have the necessary votes in order to pass the bill.

Speaker Paul Ryan held a news conference after 4pm today, which can be viewed here.  Per Speaker Ryan, ACA will remain in effect for the foreseeable future.  So please stay the course and adhere to compliance with ACA, including completing IRC Sections 6055/6056, as appropriate based on employer size and medical funding status, if not already completed.

We will continue to monitor for updates.

Previous Alert Provided March 9th:

On Monday, March 6, the U.S. House of Representatives Ways and Means and Energy and Commerce Committees released the American Health Care Act (AHCA), their proposed legislation to repeal and replace the Affordable Care Act (ACA) through the budget reconciliation process, which requires a simple majority vote of Congress. Key provisions of the bill, if enacted, would:

• Retroactively repeal the individual and employer mandate penalties to months after December 31, 2015;
• Delay the 40% “Cadillac Tax” on employer-sponsored health plans until 2025 (but would not include a cap on the employer-provided health care tax exclusion, which had been proposed in an earlier leaked draft of the AHCA and which some had expected would replace the Cadillac tax and fund the replacement provisions)
• Make significant changes to the ACA insurance coverage and marketplace stabilization provisions
• Enhance health savings accounts (HSAs) and provide a monthly tax credit
• Provide relief from many of the ACA’s taxes and fees
• Curtail Medicaid reforms

Preservation of a Majority of ACA’s Protections

The AHCA would preserve a majority of the ACA’s protections. For example, the following key ACA provisions would remain in place under the terms of the AHCA:

• Out-of-pocket 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 dollar limits for EHBs
• Prohibition on pre-existing condition exclusions
• 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); and
  prohibition on health status underwriting

The requirement to offer the EHB package for individual and small group plans also remains in place, although the actuarial value requirement would be repealed. The bill would allow states to permit rates to vary by age with a ratio of 5:1 (instead of the current 3:1 ratio) for plan years beginning on or after January 1, 2018.

Next Steps

The AHCA is only the House Republicans’ initial proposal to repeal and replace the ACA and there is likely to continue to be significant debate over the legislation. Any final legislation may look very different than the initial AHCA proposal and employers and other stakeholders should stay the course on ACA compliance at this time while they continue to monitor for changes as the AHCA makes its way through the legislative process.

For more detailed information, please download Exude’s Compliance Alert.

Exude will continue to provide additional updates as new information is released.