Simplifying ACA Repeal & Replace

What We Know So Far:

The House Republicans unveiled a plan on Monday, March 6 as the first proposal to repeal and replace the ACA.  The plan will be brought to the full House to act upon before the April 7th break.  The proposal would create a new tax credit and end the individual and employer health insurance mandates. Below are some additional key points of the proposal.

Key Points of Proposal:

  • Individuals:
    • Does NOT change the tax exclusion for employee health insurance.
    • Retroactive to January 1, 2016, repeals the individual mandate penalties in favor of a “continuous coverage” approach. Individuals pay a 30% penalty for dropping coverage.
    • Expands the types of insurance that would qualify for the premium tax credit to include “catastrophic-only” insurance and some plans not offered through an exchange. Premium credit would no longer be available for plans including elective abortions.
    • Permits FSA funds to again be used for over-the-counter medications.
    • Repeals the 0.9% Medicare tax increase on higher-income taxpayers beginning in 2018.
    • Establishes a new advanceable, refundable tax credit to help buy individual health insurance. The credit starts at $2,000 per person and grows to $4,000 with age. A family can get as much as $14,000 in total. The credit phases out for people making more than $75,000 ($150,000 for a couple filing jointly).
    • Repeals the ACA’s 3.8% net investment tax beginning in 2018.
  • For Businesses:
    • Repeals the employer mandate retroactive to January 1, 2016.
    • Nearly doubles the maximum contributions to Health Savings Accounts (HSAs)
    • Repeals the ACA’s $2,500 cap on FSAs beginning in 2018.
    • Simplifies reporting of employee health insurance coverage; possibly reduced to a W-2 check box.
    • Repeals the 2.3% medical device tax.
    • Postpone the Excise (Cadillac) Tax from 2020 to 2025
  • General:
    • Currently, the most generous health insurance for older Americans is limited to 3 times the cost of the least generous insurance for young people; but the actual cost ratio is 4.8 to 1. The bill would increase the ratio from 3:1 to 5:1.
    • Repeals the ACA’s premium tax credits beginning in 2020.
    • Allows people with pre-existing conditions to buy insurance, but requires “continuous” coverage to discourage people from buying it only when they get sick. Individuals who go uninsured for longer than a set period face 30 percent higher premiums as a penalty.
    • Bars funding of Planned Parenthood

What We Don’t Know:

We are about a month away from a decision of whether the plan will officially replace the ACA as we know it today. It is likely we will see modifications from this first draft since the Democrats were not part of its drafting and some Republications, referring to it as “Obamacare Lite”, are promising not to support it.  We also have no estimate of the proposal’s cost or how many will be covered under it.

We will provide additional updates on the impending changes as they become available.

If you have any questions or require additional assistance please contact MBL Benefits at 212-578-9667 or info@mblbc.com