On Monday the 6th House Republicans proposed their draft legislation to repeal and replace the American Health Care Act. The Trump administration is moving fast and furious through these changes and some can’t help but wonder if their fast moving pace will create sloppy work and poor decisions. The draft has already been through committee and though there may be revisions, it is expected to pass through the House and the Senate before being signed into law be President Trump as early as April.

Here are some of the key points:

·         The Cadillac Tax will be delayed until 2025 but not repealed.

·         The repeal of many of the ACA’s tax increases are delayed until 2018

·         Continues to prohibit health insurers from denying coverage or charging higher premiums for patients with pre-existing conditions.

·         Continues to allow children to stay on their parent’s healthcare plan till age 26.

·         Creates new tax credits (between $2000 and $14,000 per year) for low and middle-income individuals and families who don’t have employer group health coverage (and aren’t under the government program)

o   Credits are adjusted by age

o   Credits are reduced for individuals with incomes above $75,000 and households earning more than $150,000.

o   Credits are completely phased out for individuals making more than $215,000, with a $290,000 cap for joint filers.

·         The small business tax credit will be repealed in 2020

·         Phases out the ACA’s Medicaid expansion

·         Effectively repeals both the individual and Employer Mandates by reducing the penalties to $0 for failure to maintain minimum essential coverage.

o   These provisions include a Retroactive Effective Date (beginning 1/1/16)

o   At this point, Employer Reporting is still required.

·         It addresses many Health Savings Account (HAS) Enhancements (for 2018)

o   Maximum contributions to HSAs increase to the sum of the annual deductible and out-of-pocket limit permitted under a High Deductible Health Plan (HDHP) (i.e. at least $6,550 for single coverage and $13,100 for family coverage in 2018

o   Withdrawals from an HAS to pay for qualified medical expenses will be allowed before a HAS is established, if the HAS is established within 60 days of coverage in a HDHP plan beginning.

o   Both spouses may make catch-up contributions to one HSA.

o   Repeals increase of tax on HAS distributions not used for qualified medical expenses (rate lowered to pre-ACA percentage).

·         Repeals the tax on over-the-counter medications beginning in 2018.

·         Repeals the limit of contributions to FSAs beginning in 2018

·         Adds the Continuous Health Insurance Coverage Incentive.

o   Starting with Open Enrollment in 2019 (and any Special Enrollment in 2018) a 12-month lookback period will be used to determine if an applicant went longer than 63 days without continuous coverage.

o   Issuers will assess a flat 30% late enrollment surcharge on top of the base premium for any lapses of over 63 days. This surcharge will be the same for all and discontinued after 12 months.

These changes are being met with skepticism at best. If there is intention to open state lines and encourage competition among insurance companies, and plans to end open enrollment there is great concern that the bill will fail. Keeping children on the plan till 26 prevents young and healthy individuals from investing into insurance and results in higher premiums. If the individual mandate is eliminated and preexisting conditions is kept, this will allow everyone to purchase insurance the day they get sick- unless the republicans decide to keep open enrollment. Investment into insurance is important for the industry and fostering that should be priority. It does not, however, seem to be on the Trump administration’s to-do list. 

 

 

 

 

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