On May 4, the U.S. House of Representatives passed an amended version of the American Health Care Act. An earlier version of the bill, which acts as a replacement for the Affordable Care Act, was previously removed from House consideration at the end of March due to a lack of support from Republican lawmakers.
The latest iteration of the AHCA contains some of the elements of the original legislation, along with some new items.
Elimination of employer and individual mandate penalties
Under the ACA, businesses with more than 50 full-time equivalent employees must provide affordable minimum essential coverage to their workers. The Obama-era law also requires individuals not covered by their employer to purchase insurance via a marketplace exchange. Both parties face penalties for not adhering to these regulations.
The AHCA would eliminate the fines for non-compliance, effectively reducing them to zero starting with the 2016 reporting period. Although the employer and individual mandates would technically still exist, there would be no penalty for not adhering to the rules. The AHCA change does come with a 30 percent late-enrollment surcharge added to the cost of premiums – in effect during open enrollment in 2019 – for anyone who had a lapse of coverage of more than 63 days during the past 12 months.
Updates to health savings accounts
People enrolled in high deductible health plans have the option to put money in a health savings account. These funds can be used to pay for certain medical expenses and are untaxed.
The AHCA wants more citizens to use HSAs to reduce costs. Incentives to achieve this goal under the new bill include the following:
- Increasing maximum HSA contribution limits: From $3,400 to $6,550 for self-only coverage and from $6,750 to $13,100 for family coverage.
- Enable both spouses to add catch-up contributions to the same HSA.
- Allow the HSA to cover expenses incurred when HDHP coverage began, instead of only costs after the HSA was set up.
Other AHCA alterations
In addition to employer and individual mandate eliminations and HSA expansions, the AHCA would also attempt to modify and update Medicaid disbursements for states that have expanded their coverage, provide relief from tax provisions such as the Cadillac tax and introduce a Patient and State Stability Fund aimed at providing additional money to be used to reduce healthcare costs for individuals who are subject to state-related premium increases.
"The MacArthur amendment enables states to apply for ACA waivers."
The MacArthur amendment
At the end of April, Rep. Tom MacArthur, R-N.J., created an amendment to the AHCA. It postured that states should be able to apply for waivers to some requirements of the ACA, according to Health Affairs. Since the AHCA is deemed budget reconciliation legislation and is aimed at changing or eliminating ACA regulations that impact the federal budget, those states applying for waivers under the MacArthur grant would have to prove that their reasons accomplish cost-cutting goals or increase enrollment in the AHCA.
As a result of this amendment, several ACA requirements would stay in place, including coverage for dependents up to 26 years old, obligations to cover pre-existing conditions and nondiscrimination rules based on age, nationality, disability, sex or race, among others.
The AHCA bill will now move on to the Senate for consideration. Many Republican senators have already publicized their expectations that the Senate will create its own legislation from scratch, borrowing certain ideas from the House iteration, according to The New York Times. The updated or rewritten bill would only need a majority vote – 51, to be exact – to pass before being signed into law by President Trump. For now, however, the ACA remains the law of the land.
Triton Benefits & HR Solutions has all your updates on the repeal and replace action related to the ACA. Check back for new information on the AHCA as it reaches the Senate floor.