On Monday, the GOP released its plan to repeal and replace parts of the Affordable Care Act (ACA). Much work lies ahead in navigating the bills through Congress—two House committees will begin work on the legislation to prepare it for consideration. However, with the new GOP health plan eliminating employer mandate penalties and pushing back Cadillac Tax implementation from 2020 to 2025, the bills should be good news for employers because they will have more latitude while investing in their employee benefit plans, especially health savings accounts (and their associated high-deductible health plans), plan designs and flexible spending accounts. While much of the bills focuses on the individual markets and Medicaid reform, we are primarily addressing the effect on employers in this email.
Here are some details employers should take note of:
- The employer mandate penalty would be repealed retroactively to December 31, 2015, though its reporting requirements would remain in place
- The Cadillac Tax would be pushed from a 2020 implementation date to a 2025 implementation date
- Many of the ACA’s insurance reforms would be left in place including:
- Coverage of preexisting conditions
- Guaranteed availability and renewability of coverage
- Coverage of adult children up to age 26
- Coverage of essential health benefits
- Prohibitions against annual and lifetime limits
- The actuarial value requirements on plans would be removed, and age-banded rates would expand from the current three-to-one ratio to a five-to-one ratio
- HSA contribution limits would be capped at the same amount as the annual out-of-pocket limit, and HSA expenses incurred up to 60 days prior to beginning HSA coverage would be covered
- The annual limit on contributions to FSAs would be removed, as would the prohibition on using FSA or HSA dollars on over-the-counter medications
The bulk of the proposed legislation deals directly with the individual mandate/markets, tax credits for purchasing coverage, continuous coverage requirements and Medicaid reform. Read House Committees Release ACA Replacement Bills for more information.