A First Look at the American Health Care Act

On Thursday May 4, 2017, the House of Representatives passed the American Health Care Act of 2017. The legislation, which repeals the Affordable Health Care Act passed during the Obama administration, must move onto the Senate, and perhaps ultimately to the President, before it is put into law.

So, while none of the portions of the bill are actually law, this overview summarizes the key portions that relate to employers.

CRITICAL CHANGES

Employer Mandate: The bill reduces the penalties to $0 retroactive to 2016, effectively repealing the obligation of large employers to offer affordable, minimum essential coverage to full-time employees.

Individual Mandate: Similarly the bill reduces the penalties to $0 retroactive to 2016, effectively repealing the obligation of individuals to maintain coverage.

Employer Reporting: With removing the employer mandate, the bill seeks to simplify the reporting of an offer of coverage by checking a box on Form W-2 and having the Secretary of Treasury stop enforcing the reporting requirements.

FSA and HSA Changes: The bill eliminates the $2,500 cap on FSA salary reduction contributions, and increases the HSA contribution limits to equal the current high deductible health plan out-of-pocket limits.

Cadillac Tax: The effective date is delayed, again, until 2026. This date has been pushed out several times, leading many to believe it will never take effect.

Pre-Existing Conditions: This portion of the bill generated considerable attention in the news, though its impact on employers is perhaps minimal. The ACA prohibited insurers from denying coverage or charging more to a participant based on a pre-existing condition. The House bill provides that for individuals who maintain continuous coverage – without a break of 63 days or longer – the same prohibitions on pre-existing conditions will apply. However for those with a break in coverage longer than 63 days, insurers can impose a premium surcharge of up to 30% for up to 12 months.

BOTTOM LINE

The House bill now moves onto the Senate where further political wrangling is almost sure to happen.

 


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