The opponents of the ACA scored the political equivalent of a first down on Thursday when the House of Representatives passed an amended version of the American Health Care Act (“AHCA”). This highly publicized and politically charged legislation is the proposed first step to repealing and replacing the ACA.
At the outset, it’s important to note that no deal is done. While House Republicans got the first down, it’s the Senate that will decide if this bill crosses the goal line. Change in the Senate is nearly certain in order to secure enough votes to send the AHCA to the President’s desk.
We detailed the aspects of this legislation important to employers in this March 9 compliance update. Those changes remain in the amended AHCA. Specifically:
- The penalties associated with the employer and individual mandates are repealed
- The Cadillac Tax is delayed until 2026 (the delay was until 2025 in the initial version)
- Tax savings vehicles, such as HSAs and health FSAs, are expanded, and
- The health insurance and medical device taxes are repealed
Under the AHCA, the ACA’s premium tax credit system for low income individuals will be replaced by a refundable tax credit system that increases based on age, and decreases based on household income. Substantial changes to state Medicaid funding are also contemplated.
Much of the debate surrounding the revised ACA has been about its impact on preexisting condition exclusions. A lot of discussion on this topic is misinformation. In the large group market, the prohibition on preexisting condition exclusions will remain. As a general rule, the same will remain true in the individual and small group market. States will be allowed to apply for a federal waiver that would allow insurers to charge higher premiums to high risk individuals. However, waivers will only be granted if the state provides financial assistance or a high-risk pool to those individuals. Finally, the AHCA allows insurers to charge higher premiums (up to 30%) for up to one year to individuals with preexisting conditions who allow coverage to lapse for more than 63 days.
Again, the AHCA is not yet law. Should it successfully make it through the Senate, most anticipate it will look quite different. In the meantime, the ACA remains the law of the land and employers should continue to comply.
For more discussion on the possible impact of the ACA’s repeal, check out Managing Director Paul Ashley’s discussion with Pete the Planner. Rest assured, your FirstPerson advisory team will continue to monitor its progress and provide updates as progress is made.