Earlier today, the U.S. House of Representatives voted to approve the American Health Care Act (AHCA), which amends the Affordable Care Act. The Act narrowly passed the House with a vote of 217 to 213.
The American Health Care Act was initially introduced in the House in March 2017, but was not called for a vote due to lack of support. See our articles on the AHCA by clicking here and here.
Over the last few weeks, members of the Republican Party in the House have been working on amendments to the AHCA, in attempt to gather needed Republican support to ensure passage of the bill. The compromising changes to the initial version of the AHCA include:
- Creating an $8 billion fund to help lower premiums for people with pre-existing conditions.
- Implementing a new $15 billion risk sharing fund to help states lower premiums for coverage offered in the individual market.
- Allowing states to opt-out of providing essential health benefits.
- Prohibiting insurers from denying coverage, discriminating based on gender or limiting access based on preexisting conditions.
The final version of the AHCA passed by the House includes many changes to the Affordable Care Act that are of interest to employers. Specifically, the bill
- Repeals the individual mandate (by reducing the tax penalty to $0).
- Repeals employer mandate (by reducing the tax penalty to $0).
- Removes dollar limitations on contributions to a health flexible spending account plan.
- Repeals the tax on over the counter medications and prescriptions, thereby allowing over the counter medications to be reimbursed from a health FSA without a prescription.
- Delays the effective date of the Cadillac Tax to 2025.
- Reduces the tax on health insurance providers and pharmaceutical companies.
- Removes the additional Medicare Tax on wages earned by households with over $250,000 (filing jointly).
- Removes the limit on deductibility of salaries paid to health insurance company executives.
- Returns the deduction on medical expenses to those over 7.5% of income.
The AHCA is drafted as an amendment to the Affordable Care Act, and does retain some of its requirements. Specifically:
- The Cadillac Tax is retained, but it's effective date is delayed.
- The PCORI fee is retained.
- Employers must continue to identify the value of health coverage on Form W-2.
The bill now moves to the U.S. Senate for consideration. If passed by the Senate, it will go back to the House for final approval. If both Houses of Congress approve the same version of the bill, it will be presented to the President for signature and would then become law.
