This morning, Senate Republicans released their proposal to repeal and replace the Affordable Care Act (ACA). Called the Better Care Reconciliation Act of 2017 (BCRA), the Senate proposal adopts H.R. 1628, the bill narrowly passed last month by the House of Representatives, but replaces all the text. The Senate proposal was released without going through committee review or being scored by the Congressional Budget Office (CBO). Next week, after the CBO provides cost and impact estimates, the full Senate will begin debating and amending the proposed legislation.
As was the case with the House bill, the Senate’s BCRA primarily focuses on funding for Medicaid and other state programs, maintaining stability in the individual insurance markets, and giving individual states more flexibility in opting out of insurance reforms. Also included are a number of provisions offering relief to employers and reducing the scope of requirements on group health plans. Below are highlights of provisions of the most interest to employers.
- 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 would still be an issue for certain large employers that did not qualify for transition relief that year.
- Employer Reporting: The existing 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. The additional Medicare tax on high earners would be repealed starting in 2023.
- 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.
- Health Savings Accounts (HSAs): The annual HSA contribution limits would be increased significantly for years after 2017.
- Health Flexible Spending Accounts (HFSAs): The annual contribution limit, currently $2,600 per 12-month period, would be repealed for years after 2017.
- 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 for years after 2017.
The Senate proposal is similar to the House bill in most areas that directly affect employers, such as relief from the employer mandate, repeal of various health plan fees and taxes, and fewer restrictions on group insurance and benefit plan designs. Those sections, however, are part of a large piece of legislation that may face obstacles in the Senate due to the proposal’s significant impact on Medicaid funding and the individual insurance markets. Without support from at least 50 of the 52 Senate Republicans, the legislation will fail. At this time, at least four of those Senators are withholding their support.
ThinkHR will continue to monitor and report on developments as the Senate begins debating the proposal. In the event a bill successfully passes the Senate, it would be returned to the House for consideration.