AHCA: 12 things employers should know
May 5, 2017 1:03 PM
J. Scott Applewhite/Bloomberg
AHCA: 12 things employers should know
The House of Representatives passed the American Health Care Act Thursday — which contains some major changes to the Affordable Care Act that will impact employers.
Here are 12 things companies need to know about what the AHCA does.
Here are 12 things companies need to know about what the AHCA does.
Eliminates the ACA’s employer shared responsible tax penalty — commonly referred to as the employer mandate or pay or play) — effective for tax years after Dec. 31, 2015.
Eliminates the ACA’s individual shared responsibility tax penalty — commonly referred to as the individual mandate — effective for tax years after Dec. 31, 2015. Instead of the individual mandate, the bill promotes continuous coverage for individuals by adding a new “continuous coverage” requirement that allows insurers to impose a 30% surcharge on otherwise-applicable premium rates for 12 months for individuals who have lapses in health coverage of at least 63 days.
Delays the Cadillac tax until 2026 by eliminating its tax penalty for years 2020 through 2025.
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Does not eliminate the ACA information reporting requirements, but with respect to employer reporting requirements, adds an additional Form W-2 field to account for each month with respect to which an employee is eligible for a group health plan. Employers are still required to report the cost of coverage amount on the Form W-2.
Unlike an earlier draft of the bill, the final House bill does not cap the tax benefit for employer-sponsored health insurance coverage.
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Raises the tax-free contribution limit to health savings accounts to match the out-of-pocket cost maximum on high-deductible health plans and adds other provisions to make HSAs more flexible. Unlike earlier drafts of the bill, the final House bill does not allow excess tax credits to be paid into designated HSAs.
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Replaces the ACA’s exchange subsidies with a refundable tax credit tiered by age as follows:
· $2k per year for anyone under age 30
· $2.5k per year for ages 30-39
· $3k per year for ages 40-49
· $3.5k for ages 50-59
· $4k for age 60 and over
· The tax credit amounts are phased out for individuals with income over $75k (or $150k for joint filers).
· The tax credit is available for coverage in both the individual market and exchanges and for unsubsidized COBRA coverage (purchased on or off the exchanges).
The tax credits are not available to individuals who are eligible for a group health plan (including employer-sponsored coverage), Medicare, Medicaid or other government coverage.
· $2k per year for anyone under age 30
· $2.5k per year for ages 30-39
· $3k per year for ages 40-49
· $3.5k for ages 50-59
· $4k for age 60 and over
· The tax credit amounts are phased out for individuals with income over $75k (or $150k for joint filers).
· The tax credit is available for coverage in both the individual market and exchanges and for unsubsidized COBRA coverage (purchased on or off the exchanges).
The tax credits are not available to individuals who are eligible for a group health plan (including employer-sponsored coverage), Medicare, Medicaid or other government coverage.
Eliminates the ACA’s requirement that health insurance plans in the individual and small group markets offer insurance plans designated by four standard levels of coverage called the “metallic tiers” of coverage.
Beginning in 2017, the bill repeals the following taxes and fees (among others):
· The annual insurance provider fee
· The net investment income tax
The medical device tax
· The annual insurance provider fee
· The net investment income tax
The medical device tax
For plan years beginning on or after Jan. 1, 2018, allows states to apply to waive the AHCA’s age rating ratio of 5:1 (it was 3:1 under the ACA). Specifically, states will be able to apply a higher ratio for age-based premium rating (higher than 5:1) in the individual and small group markets.
For plan years beginning on or after Jan. 1, 2020, allows states to apply to waive the ACA’s essential health benefit (EHB) requirements for the individual and small group market. Specifically, states will be able to establish and apply their own EHB requirements (rather than those under the ACA) for coverage in these markets.
Beginning with 2019 enrollments, for states that have established an AHCA-approved high-risk pool program, allows states to engage in health status underwriting for individuals in the program who cannot demonstrate that they had continuous coverage over the prior 12 months (in lieu of the above-referenced 30% surcharge otherwise imposed for non-continuous coverage under the AHCA).
