Representatives have released a first draft of health care plans to replace the Affordable Care Act.
Here is a brief look at the proposal, what would change, and what would remain unchanged from our current system.
Proposed Changes:
- Proposed name change from Affordable Care Act (ACA) to American Health Care Act (AHCA).
- Repeals the individual mandate and tax penalty retroactively to Jan 1, 2016; Americans no longer required to obtain health care coverage.
- With the individual mandate disappearing, lower participation among healthy people may increase insurance prices. To mitigate this, they propose a “continuous coverage incentive” which charges a 30% penalty in the individual and small group market for lapses in coverage.
- Repeals the requirement for companies to provide affordable health coverage to employees.
- Eliminates federal cost-sharing tax credits for out-of-pocket costs such as deductibles and copays.
- Shifts subsidies for premium costs from income-based to age, maxing at $2,000 per year for individuals under 30 and $4,000 per year for those over 60.
- Cuts federal funding for Medicare expansion in 2020 and shifts it to states.
- Repeals the small business tax credit beginning in 2020, and between 2018 and 2020 eliminates the small business tax credit for any plans that cover voluntary abortions.
- Almost doubles HSA (health savings account) allowable contributions, to $6,550 individual and $13,100 family maximums.
- Repeals FSA contribution limits (currently $2,500) beginning 2018 and again allows over-the-counter medicines.
- Increases the maximum ratio at which older plan participants can be charged compared to younger ones from 3:1 to 5:1, with states having the ability to widen that ratio further.
- Delays the 40% excise Cadillac tax on high-cost plans another five years, to 2025.
- Repeals the additional 0.9% Medicare tax imposed on those earning more than $200,000 per year.
- Invests $100 billion in state funds to help subsidize high-risk patients and stabilize the markets.
Staying the same:
- Children allowed to stay on their parents’ health plans until age 26.
- People can still join a plan and not be penalized for having pre-existing conditions.
- Insurers cannot set a limit on how much they have to pay to cover someone.
- Insurance plans must cover 10 essential health benefits, including preventative and maternity care.
Where we are now:
The AHCA bill is only in the proposal stage at this point.
It has passed the first hurdles, gaining approval from the House Ways and Means and House Energy and Commerce committees. Several other committees, including the Congressional Budget Office, will need to approve the bill before it goes to the floor for a vote.
The AHCA has not yet passed the House of Representatives nor Senate. While it’s extremely probable that the ACA will face revisions or repeal, the AHCA will likely undergo revisions before passing Congress.
As a reminder, all of Nextep’s health plans are compliant with current ACA requirements. We will continue to keep an eye on developments, keep you updated, and make any needed changes to our plans in alignment with official mandates to keep you compliant.
Questions? We’re here to help! Please contact our benefits team online, via chat, in the help section of your account, or at 888-811-5150.
