On March 6, 2017, Republicans put forward their plan to repeal and replace the Affordable Care Act (ACA), also known as Obamacare. Although this proposed bill will no doubt have some changes as it makes its way through committees and both houses of Congress, here is a summary of what is in the first public draft of the bill:
What’s in – provisions from the ACA that remain in the new bill
- Insurance carriers cannot deny coverage or charge more to people with pre-existing medical conditions.
- Children under the age of 26 can remain on their parents’ health insurance.
- The so-called Cadillac tax on generous health plans will go into effect in 2025, pushed from January 2020.
- Employers would still be required to report the value of their health insurance on employee W-2 forms.
What's out – provisions from the ACA not included in the bill
- The individual mandate: Americans would no longer be required to buy health insurance or pay a penalty for failure to do so.
- Employer mandate: The bill eliminates the requirement for employers with over 50 employees to provide health insurance for their full-time employees or potentially pay penalties.
- Marketplace subsidies: Currently, premiums for coverage purchased in the healthcare marketplace are subsidized for people of certain incomes. This provision is removed in the updated bill.
- Medicaid expansion: In 2020, enrollment in Medicaid would be capped at a specific number of people and the expansion would be frozen.
- Taxes on health insurers, pharmaceutical and medical device manufacturers would be eliminated.
- Funding for Planned Parenthood: President Trump has stated that he would be willing to keep funding in place if Planned Parenthood agrees to stop providing abortions in its clinics.
New provisions introduced in the bill
- Tax credits replace subsidies: The tax credits are based on age. Younger Americans would receive lower amounts ($2,000) and the amounts increase with age (capped at $4,000). Tax credits could not be used to purchase health insurance that covers abortion.
- Health savings account expansion: Calendar year contribution limits would double to $6,000 for individuals and $13,000 for families.
- A return of continuous coverage requirements: With the passage of the Health Insurance Portability and Accountability Act (HIPAA) in 1997, people were required to provide proof of continuous coverage to avoid pre-existing condition clauses in their health plan. This new version of a continuous coverage requirement adds a surcharge of 30 percent to premiums for people who cannot show that they had continuous coverage when they purchase coverage.
As the bill makes its way through Congress, it is likely that some of these provisions will change. It is also important to remember that these are proposals that have not yet been enacted. All current provisions of the ACA should be adhered to until they are repealed.
This communication is for informational purposes only; it is not legal, tax or accounting advice; and is not an offer to sell, buy or procure insurance.
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