The American Health Care Act
On March 6, 2017, the House Committee on Energy and Commerce, jointly with the House Ways and Means Committee, released the long-awaited Affordable Care Act repeal and replacement legislation. Titled the American Health Care Act (AHCA), the legislation largely eliminates the ACA’s taxes, penalties and mandates. It also eliminates the ACA’s subsidies for individual health insurance (the “repeal”), and then implements a new system of advanced tax credits that can be used to purchase coverage, including guaranteeing access to coverage (the “replacement”).
The details will need to be sorted out over the next couple of weeks, and there are some missing items. Namely, the legislation doesn’t include significant details on how to cover the cost of the new law. However, there are several highlights:
- Elimination of the expansion of Medicaid.
- Elimination of cost-sharing subsidies.
- Implementation of state-based high-risk insurance pools with federal monetary assistance.
- Elimination of the penalties for both the Individual and Employer mandates.
- Repeal of the all the taxes implemented as part of the ACA – except the Cadillac tax, which was pushed back until 2025.
- Adjustments to tax-favored accounts like FSAs and HSAs.
- Changes to the employer reporting requirements.
Many of these changes take effective January 1, 2018, while others are deferred until January 1, 2020.
It’s important to note one major difference between this bill and the draft version leaked earlier in February. The draft version included a “pay-for” (method of paying for the expense of the new law) that involved capping the tax exclusion for employer-provided plans. This would have had the effect of implementing a tax increase on certain employees. It appears for now that’s off the table, replaced instead with the continuation of the Cadillac tax (albeit with a deferral date of 2025).
The publication of these new pieces of legislation is a continuation of the process begun back in January by both the Senate (with the creation of a reconciliation bill for 2017) and the Administration (with President Trump’s ACA Executive Order), and the process will continue over the next few weeks as the House takes up the job of “marking up” these bills. That begins on March 8 when the Ways and Means committee holds its first hearings on the AHCA.
Once the House finalizes the mark-ups, the Senate will take over and do their mark-ups. When that process concludes, both the House and Senate need to approve the final version before it goes to President Trump for signature into law. In other words, much work remains to be done on the statutory side. And once that’s completed, the DOL, HHS and IRS will need to implement new regulations to conform to the new laws.
There will no doubt be significant developments on the AHCA over the next few weeks. Assurance will continue to monitor and communicate developments as they occur. In the meantime, please reach out to us with any questions you may have. For a deeper dive into the latest updates, be sure to join us on March 29 for ACA Trumped – Part 2 Webinar.
- ACA Trumped - Part 2 Webinar
- ACA: Is it the Beginning of the End?
- ACA Trumped Webinar Replay
- ACA Trumped Webinar Q&A
- Compliance Support Page
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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