On May 4 the House of Representatives passed H.R. 1628, the American Health Care Act (AHCA), by a narrow 217 (Republican) v. 213 (Democratic) votes. The AHCA is the bill that repeals and/or reforms multiple provisions of the Affordable Care Act (ACA), including all of the following:
- “Pay or Play” Mandate — Repealed as of 1/1/2016
- ACA Reporting — Partial repeal of employer reporting requirements for ALEs (IRC 6056 as of 1/1/16), but retains reporting on offer of MEC coverage (IRC 6055)
- Individual Mandate Penalty — Repealed and replaced with a 30 percent surcharge on premiums when individuals experience a break in coverage greater than 63 days within a 12-month period
- Insurance Marketplaces/Exchanges — Modifies rating methodologies from a 3:1 to a 5:1 ratio; modifies the provision of subsidies to individuals in exchanges as of 1/1/2019
- Medicaid Expansion — Repeals expansion as of 2020 and grants states discretion ability to establish eligibility criteria for Medicaid eligibility
- Market Reform Changes — Provides state discretion to define essential health benefits as of 1/1/2020 and allows for the creation of high-risk pools for individuals with chronic conditions, prohibits pre-existing condition exclusions
- Repeals Myriad of ACA Taxes — PCORI, Health Insurance Tax, exchange surcharge in small group coverage, medical device manufacturer tax, annual limits on health FSAs, Medicare taxes for high-income earners, etc.
- Cadillac Tax Plan — Delayed until 2026
Passing H.R. 1628 in the House is the first step of the legislative process. The Senate must also pass H.R. 1628 before the bill is sent to President Trump for signature. Note that the Senate will only require a simple majority vote to pass H.R. 1628 (50 votes) and that the Republican Party currently holds 52 seats in the Senate.
Until the AHCA becomes law, our clients are encouraged to comply with the provisions of the ACA. We will continue to monitor and keep you abreast of developments on the American Health Care Act (AHCA). We will be drafting and issuing a client alert on this development soon.