Today, Senate Republicans unveiled their latest attempt to repeal and replace the Affordable Care Act (ACA). This revamped version of last month’s proposed Better Care Reconciliation Act of 2017 (BCRA) contains changes with respect to funding for Medicaid and other state programs along with new proposals affecting individual insurance markets. For items that are of particular interest to employers, however, today’s proposal is very similar to the original draft.
- Employer Mandate: The BCRA would repeal the ACA’s employer shared responsibility provision, that is the so-called “employer mandate” or “play or pay,” as of 2016. The rules for 2015 would not change, which may be an issue for certain large employers that did not qualify for transition relief that year.
- Employer Reporting: The existing ACA rules requiring completion of Forms 1094 and 1095 would continue to apply, although the IRS may have the ability to soften them in the future.
- Taxes and Fees: The Cadillac tax on high-cost health plans would be delayed six years, then take effect in 2026. The PCORI fee would continue as previously scheduled for plan years through September 2019. Regarding the additional Medicare tax on high earners, the BCRA originally proposed repealing it in 2023 but the revamped proposal leaves this tax in place indefinitely.
- Health Plan Requirements: Current ACA rules regarding eligibility for children to age 26, limits on waiting periods, prohibitions against annual or lifetime dollar limits, and most other provisions would continue unchanged. Coverage for pre-existing conditions generally would be protected, at least for persons that maintained continuous coverage.
- Essential Health Benefits (EHBs): The ACA currently requires broad coverage of all EHBs in the small group insurance market (unless grandfathered or grandmothered). The BCRA would give the individual states broad flexibility to determine EHBs and to change or reduce any coverage standards. (In the individual insurance market, states could allow the sale of bare-bones policies provided at least one ACA-style option was also available.)
- Small Group Policies: The small group insurance market currently serves employers with fewer than 50 employees (or fewer than 100 employees in some states). The BCRA proposes to allow states to expand the availability of association plans as another option for small businesses.
- Health Savings Accounts (HSAs): The annual HSA contribution limits would be increased significantly starting in 2018.
- Health Flexible Spending Accounts (HFSAs): The annual contribution limit, currently $2,600 per 12-month period, would be repealed for plan years starting in 2018 and later.
- Over-the-counter (OTC) medications: The ACA prohibits HSAs, HFSAs, and other reimbursement accounts from covering OTC medications (unless prescribed or insulin). The BCRA would repeal this provision starting in 2018. The change may apply for 2017, too, although HFSAs and other group plans likely would need IRS guidance before adopting retroactive amendments.
Proposals and Competing Proposals
As the Senate Leadership released its revamped proposal today, several fellow Republican Senators immediately expressed concerns that the draft was either too conservative or not conservative enough to gain their support. Simultaneously, two other Republican Senators (Graham (R-SC) and Cassidy (R-LA)) announced that they were working with several colleagues on an alternative proposal based on the general concept of repealing some portions of the ACA and allowing each state to decide whether or how to replace those items.
In order for any proposal to move forward, at least 50 Senators would need to pass a motion to proceed. That is, 50 votes are needed just to move a proposal to the Senate floor for debate and amendment. Republicans currently hold 52 seats, but the number of competing proposals and opinions being voiced demonstrates that they are far from agreeing on how to proceed. And that’s just one caucus in one chamber.
In the meantime, the ACA has not changed. Employers are advised to continue with business as usual under the current law.
For details on the revamped version of the Senate proposal to repeal and replace the ACA, see:
ThinkHR will continue to monitor and report on developments that impact employers and their group health plans.