On June 22, 2017, the Senate Subcommittee released a “Discussion Draft” of the “Better Care Resolution Act” aimed at repealing and replacing the ACA.
Congressional Budget Office (CBO) Report:
On June 26, the Congressional Budget Office (CBO) “scored the bill” (meaning outline the projected cost over a 10 year period of time). The CBO report estimated that the Senate Republican health-care overhaul would result in 22 million more people uninsured and cut the cumulative federal deficit by $321 billion in the next decade compared with the current Affordable Care Act.
The Senate will likely begin the voting process on the bill on June 28 and a final vote is anticipated sometime on June 29.
If the bill is passed by the Senate, the Senate and House versions will have to be reconciled. This can be done with a conference committee, or by sending amendments back and forth between the chambers. With a conference committee, a conference report requires agreement by a majority of conferees from the House, and a majority of conferees by the Senate (not both together). Alternatively, the House could agree to the Senate version or start over again with new legislation.
There is significant political speculation at this point as to whether Republicans have the votes to pass the bill in its current form.
Republicans can only sacrifice two votes and there are rumored to be at least four Republican senators who are concerned with the bill.
Major Changes that Impact Employers: Note: a “√” indicates the provision is essentially the same as the AHCA, the house version of the repeal/replace bill.
Repeals “Pay or Play” penalties √
Pushes out Cadillac tax to 2025 √
Permits states to waive essential health benefits requirements √
Removes $2,500 limit on FSAs √
Allows OTC drug expenses to, once again, be eligible under FSA plans √
Increases maximum HSA contributions and allows both spouses to make catchup contributions √
Increases the maximum contribution limits to HSAs to the amount of the accompanying HDHP and out-of-pocket limitation √
Allows health insurance offered in individual and small group market to vary rates by 5:1. (This allows older individuals to be charged up to five times more than what younger individuals pay for the same policy, rather than up to the ACA limit of three times more.) √
Repeals the small employer health insurance tax credit √
Repeals key taxes, including HIT, Rx industry tax, and Medical device tax.
Repeals Medicare payroll tax (as of 2023).
Requires states to set their own MLR and rebating rules.
Adds new ERISA structure that allows AHPs to be established for small groups and individuals. Such plans would be exempt from community rating and EHB requirements.
Other Major Changes:
Repeals “Individual Mandate” penalties √
Retains the premium subsidy structure, but adjusts eligibility and lowers top threshold for subsidies to 350% of the FPL (down from 400%).
Changes the benchmark for premium subsidies to cheaper plan (58% of AV) with the applicable median cost benchmark plan (rather than the second lowest cost silver plan).
Eliminates eligibility for tax credits if eligible for group insurance, even if group insurance is not affordable or minimum value.
Subsidies are not available for plans that cover abortions.
Loosens/expands the waiver processes and requirements to give states more flexibility with respect to ACA requirements, including Qualified Health Plan requirements, Essential Health Benefits, etc.
Phases out Medicaid expansion between 2021 and 2024. Proposes cuts to Medicaid funding thereafter. Generally restructures the federal financing system for Medicaid.
Allows states to impose work requirements on nondisabled, nonelderly, non-pregnant adults as a condition of Medicaid coverage.
Reduces the tax imposed on HSA distributions not used to pay for qualified medical expenses from 20% to 10%.
Restrict those able to use the premium tax credit to “qualified alien” (as defined by the Personal Responsibility and Work Opportunity Reconciliation Act of 1996).
Repeals net investment income tax.
Key ACA Elements Retained
Retains protections for pre-existing conditions (insurance companies cannot deny coverage or increase premiums) (Different from AHCA).
Retains coverage for dependent children to age 26.
What Does it Mean for Employers?
At this point, there is no change to existing law for employers.
While the passage of this bill may signal potential change in the ACA, significant additional steps remain before any change becomes law.
Employers are strongly advised to maintain current ACA compliance.
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