The American Health Care Act (AHCA)

shutterstock_216021430The US House of Representatives passed the American Health Care Act (AHCA) on May 4th which will now be sent over for consideration by the Senate. While deemed a victory by many who have wanted to repeal and replace the Affordable Care Act (ACA), it is important to understand what this bill actually proposes to do – or not do – in order to fully understand how it might impact employers and ultimately the benefit plans they offer to their workforce. Furthermore, it is also important to understand that this is just the beginning. It’s likely that the Senate will markup the House version to a great extent (if they don’t just end up writing a bill of their own) at which point committees would have to get involved to try and craft one bill incorporating the provisions of each independent bill.

While there are many parts of the ACA that are touched by the AHCA, specifically items such as Medicaid reform that are a study unto themselves, we wanted to focus on some of the areas where we believe the legislation, should it ultimately become law, would have a more direct impact on employees and employers. Here are some of those proposed changes:

  • Delay the “Cadillac Tax’ until 2025
  • Remove the limit on FSA contributions (ACA limited these contributions to $2,500 / year)
  • Restore the ability to use HSA funds to purchase over-the-counter drugs
  • Repeals the Small-business tax credit for the SHOP exchanges in 2020
  • Eliminate individual mandate penalty
  • Eliminate employer mandate penalty for Applicable Large Employers (ALE’s)
  • Allows plans to increase premiums by 30% for 12 months for anyone who has a lapse in coverage of more than 63 days
  • Broadens the age-rating requirements from 3:1 to 5:1, while also allowing states to apply for a waiver to the 5:1 standard (this would provide more variance in pricing between younger versus older individuals)
  • Repeals taxes on prescription drug manufacturers, medical device manufacturers and the health insurance tax imposed on insurance carriers

While the AHCA would do much more than just what’s listed here, these items all seem to be in-line with the attempt to remove unnecessary costs in the system and to fight back against the overall cost of insurance. When considering all of the changes that it might make, it is also important to understand a few provisions of the ACA would NOT be affected and would, therefore, remain in place should the AHCA be enacted:

  • Annual cost-sharing limits (currently $7,150 single / $14,300 family)
  • Requirement to cover pre-existing conditions
  • Coverage for adult children to age 26
  • Guaranteed availability and renewability of coverage (in the fully-insured market)

Unless and until the Senate and President Trump move forward with the AHCA, the ACA is still the law of the land. But passage of the AHCA by the House has certainly turned up the conversation about how to best try and fix our broken healthcare system.

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