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ACA UPDATE: Overview of Graham-Cassidy Health Care Bill

Employee Benefits

On Wednesday, September 13, 2017, members of the U.S. Senate released a health care bill referred to as the Graham-Cassidy Health Care Plan. The bill is the latest version of an effort to repeal and replace the Affordable Care Act and is being proposed using the budget reconciliation process covered in the M3 ACA Update: How the Will ACA Change in 2017?

The major highlights of the proposal as it pertains to employers includes:

Employer Plans:

  • Employer Mandates: The Employer Mandate is essentially eliminated, by reducing the employer penalties for not offering coverage to $0 and would be retroactive to January 1, 2016.
  • Small Business Tax Credit: The small business tax credit would be eliminated effective January 1, 2020.

Individual Market Plans:

  • Individual Mandate: The individual mandate is essentially eliminated, by reducing penalties to $0 effective January 1, 2016.
  • Subsidies: Marketplace subsidies would be eliminated.
  • Catastrophic Plans: Allowing individuals in the individual market to purchase low-value catastrophic health plans which provide limited coverage.
  • Medicare Part D Subsidies: Reinstates the deduction for expenses related to Medicare Part D effective January 1, 2017.

Overall Market Changes:

  • Essential Health Benefits: Loosens the EHB requirements to give states more flexibility with respect to requirements.
  • Pre-existing Conditions: Loosens the pre-existing condition provisions to give states authority over pre-existing condition requirements for individual and small-group markets.
  • Medical Device Tax: Eliminates the medical device tax effective January 1, 2018.
  • Consumer Provisions:Includes the loosening of the rules to health savings accounts (HSAs) and allowing coverage of over-the-counter (OTC) medication for FSA/HSA reimbursement funds. The loosening of HSA rules would include a provision allowing individuals to purchase coverage with HSA dollars.
  • Direct Primary Care Service Arrangements: Allows the continuation of Direct Primary Care Service Arrangements (an arrangement in which an individual is provided coverage restricted to primary care services in exchange for a fixed fee/payment), but does not allow them to be considered health plans or health insurance for legal purposes.  Those payments would however be treated as medical care under Section 213(d) of the IRS Code.

Key Takeaway

Please note that this is drafted legislation and is subject to changes during the legislative process. The Senate has not yet scheduled a vote on the bill and if the bill is passed, it will be subject to normal legislative scrutiny in the House of Representatives.

M3 will continue to provide you with updates when major changes are made to the proposal or steps in the legislative process occur. Visit M3’s Health Care Reform website page to access additional resources; or if you have specific questions, rely on your M3 Account Executive for assistance.

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