On Thursday afternoon, members of the House took first steps toward repealing and replacing the Affordable Care Act (ACA) by passing the American Health Care Act (AHCA). While the majority of the AHCA deals with individual markets and Medicare, there are provisions that will affect employers if the bill becomes law. In particular, the AHCA would reduce the penalties imposed under the Individual and Employer Mandates to zero beginning in 2016, effectively repealing both (although they would technically still exist).
Here are some details of the bill that 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- The Employer Mandate penalty would be repealed retroactively to December 31, 2015, though its reporting requirements would remain in place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 2020 to 2025 implementation
- Many of the ACA’s insurance reforms would be left in place including:
- Coverage of preexisting conditions (with some new limitations)
- Guaranteed availability and renewability of coverage
- Coverage of adult children up to age 26
- Coverage of essential health benefits (with some exceptions/waivers allowed)
- Prohibitions against annual and lifetime limits (with some exceptions/waivers allowed)
- The actuarial value requirements on plans would be removed, and age-banded rates would be expanded 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
Again, the bulk of the legislation deals directly with the individual mandate/markets, tax credits for purchasing coverage, continuous coverage requirements and Medicaid reform. Additionally, many of the provisions in the legislation will be heavily modified before passing the next hurdle: making it through the Senate. Read House Republicans Pass Amended AHCA for more information.