From the AHCA to BCRA: A Tale of Two ACA Repeals
On June 22, 2017, the Republican-led Senate released a discussion draft of its ACA “repeal and replace” effort, titled the Better Care Reconciliation Act (BCRA) of 2017. As many suspected, the BCRA is broadly similar to the American Health Care Act (AHCA), which was passed earlier this year by the House. There are plenty of sources available to review this draft – I would recommend Axios’ brief write up – so instead I want to talk about the implications, and where things can go from here.
First and foremost, this is a discussion draft. The bill will very likely change before it gets voted on, which purportedly will be before the Fourth of July holiday (though that’s not guaranteed). And changes will be needed in order to secure enough Republican votes for it to pass. Within hours of the BCRA becoming public, several Republican Senators expressed a negative opinion of the BCRA, and the Republicans can only afford to lose two votes and still pass the bill. Much like the AHCA needed the MacArthur Amendment to pass in the House, the BCRA will likely need an amendment to pass as well. Bottom line: the details of the BCRA are still fluid and subject to change.
Secondly, as it stands right now, the BCRA eliminates the ACA’s individual and employer mandates (and their associated penalties), as well as eliminating almost all the ACA’s taxes (the notable exception being the Cadillac tax, which would still exist but is deferred until 2025). Reporting, however, remains in place, though we do expect that, should the BCRA become law, the IRS will address the 1094 and 1095 reporting system as many of its elements would no longer be necessary. For instance, the BCRA retains the ACA’s low-income subsidies, but employer plans would no longer need to meet any affordability guidelines, so much of the data recorded on Form 1095C is no longer relevant.
Lastly, the next few days will be critical to the whole repeal and replace effort. The administration and Congress remain highly focused on reforming the tax code – and that work must start very soon if they want to have any chance at completing it while Republicans still control both parts of Congress. Repealing the ACA’s taxes via the BCRA makes overall tax reform easier, but it isn’t required. Consequently, while it’s likely there will be a BCRA vote soon, if it fails, it’s doubtful Congress will continue to work on the ACA until after the 2018 mid-term elections (and should the Democrats retake control of at least one part of Congress, that effort may not come to fruition for years to come). Stay tuned – it’s going to be a wild ride until they get to a vote!
For now, the ACA remains the law of the land and until the bill is passed and the president signs it into law, nothing has changed. Continue as normal for now, and we’ll keep you posted on developments.
Information contained herein is not intended to constitute tax or legal advice and should not be used for purposes of evading or avoiding otherwise applicable regulatory responsibilities as issued by the federal or state government(s) and/or taxes owed under the Internal Revenue Code. You are encouraged to seek advice from your legal or tax advisor based on your circumstances.
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