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ACA Update: Senate Introduces Health Care Bill

Employee Benefits

On Thursday, June 22, 2017, the U.S. Senate released their working draft of a health care bill entitled the “Better Care Reconciliation Act of 2017.” The bill essentially is the Senate version of a repeal and replacement of the Affordable Care Act.  A copy of the bill is available here and is being proposed using the budget reconciliation process.

The highlights of the proposal as it pertains to employers include:

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:

  • 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 also 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.
  • Individual Mandate: The individual mandate is essentially eliminated, by reducing penalties to $0 effective January 1, 2016.

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.
  • Consumer Provisions: Includes a repeal of the employee contribution caps for flexible spending accounts (FSAs), a loosening of rules to health savings accounts (HSAs) and allowing coverage of over-the-counter (OTC) medication for FSA/HRA/HSA reimbursement funds.

Key Takeaway

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

M3 will provide you with updates when major changes are made to the proposal or steps in the legislative process occur.

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