Keep up with today’s trending topics: VISIT THE INSIGHT CENTER

ACA UPDATE: Updated Version of Health Care Bill

Employee Benefits

On Thursday, July 13, 2017, the U.S. Senate released an updated version of a health care bill entitled the “Better Care Reconciliation Act of 2017.” 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.
  • Cadillac Tax:  The Cadillac Tax would be functionally delayed until the year 2025.
  • Small Business Tax Credit:  The small business tax credit would be eliminated effective January 1, 2020.
  • Small Business Associations:  Allows for the establishment of association health plans for the purpose of creating large group plans for small businesses.

Individual Market Plans:

  • Individual Mandate:  The individual mandate is essentially eliminated, by reducing penalties to $0 effective January 1, 2016.
  • Subsidies:  Marketplace subsidies would still exist, but the eligibility cap is lowered to 350% of the federal poverty line. Subsidy amounts would also be tiered by age and income. (Subsidies are not available for anyone who receives an offer of coverage from their employer, regardless of affordability or value.)
  • Benchmarks:  Shifts the benchmark plan for purposes of subsidy calculations from the standard silver plan to an applicable median cost plan based on location.
  • Certificates of Credible Coverage:  People participating in the individual market must provide carriers proof of continuous coverage for the previous 12 months, or a six month waiting period will apply.
  • Catastrophic Plans:  Allowing individuals in the individual market to purchase low-value catastrophic health plans which provide limited coverage.

Overall Market Changes:

  • Essential Health Benefits:  Loosens the EHB requirements to give states more flexibility with respect to requirements.
  • Stability and Innovation Program:  Creates short and long-term programs called “stability innovation programs” to address coverage, disruption and high risk pools to stabilize premiums.
  • Taxes:  Repeals most ACA taxes by 2023, with the exception of the Medicare and net investment income taxes.
  • Consumer Provisions:  Includes a repeal of the employee contribution caps for flexible spending accounts (FSAs), a loosening of the rules to health savings accounts (HSAs) and allowing coverage of over-the-counter (OTC) medication for FSA/HRA/HSA reimbursement funds. The loosening of HSA rules would include a provision allowing individuals to purchase coverage with HSA dollars with some purchasing restrictions.

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.

Back to Insight Center