Update on ACA Repeal Efforts

As promised by President Trump, efforts are currently under way in Congress to repeal the Patient Protection and Affordable Care Act (ACA). Early Thursday morning, March 9, 2017, the House Ways and Means Committee voted to approve the new American Health Care Act (AHCA), meant to replace the ACA.

What would the AHCA mean for employers? These are the major highlights of the potential new Act:

Reduce or Eliminate the Employer Mandate Penalty. The current penalty under ACA would be reduced to $0. This would be retroactive to December 31, 2015, which is good news for employers who were penalized under the ACA. However, the employer mandate to provide coverage would still be in place, unless it is repealed under future revisions of the AHCA. Employers would still be required to report coverage as they do under the ACA.

Delay of Excise Tax on High-Value Plans. This tax would have been imposed on so-called “Cadillac plans” beginning in 2020. Under the AHCA this tax would not go into effect until after December 31, 2024.

Repeals the Health Insurance Tax. While there has been a delay on implementing the health insurance tax on certain insurers (currently set to begin after December 31, 2017), the AHCA would repeal this tax. This tax savings would presumably keep premiums in check from those insurers.

Repeals Tax Increase on Health Savings Accounts (HSA). Repealing this tax increase may make HSA plans more attractive to employees.

Repeals on Contribution Limits to Flexible Spending Accounts (FSA). Beginning December 31, 2017 the ACA limit of $2,500 contributions to FSAs would be repealed for both employers and individuals.

The AHCA at this doesn’t change some of the most popular parts of the ACA including:

  • Coverage for adult children up to age 26

  • Coverage for pre-existing conditions

  • Guaranteed renewability of coverage

  • Caps on out-of-pocket expenditures

  • Prohibitions of underwriting, lifetime and annual limits and discrimination

There are expected to be more changes and refinement of the AHCA as it works its way towards Congressional approval.

For now, the ACA is still law and a repeal may not eliminate reporting requirements. Based on what we know today, the IRS will likely expect employers to track and report for the 2017 plan year. So for now, stay the course.

We will continue to keep you updated as changes occur.

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