June 29, 2017
Senate GOP’s Better Care Reconciliation Act Update
Senate Republicans released their health reform overhaul – the “Better Care Reconciliation Act of 2017” – late last week after weeks of intrigue. Highlights of the Better Care Reconciliation Act (BCRA) can be found below.
A vote on the bill was intended to be pushed through by the end of this week however, Senate Majority Leader Mitch McConnell announced late Tuesday that the vote would be postponed until after the July 4 recess amid faltering support for the bill.
McConnell’s decision came just one day after the Congressional Budget Office (CBO) reported the bill would result in a net reduction of $321 billion in the deficit over the 2017-2026 period and that 22 million fewer people would be covered by health insurance by 2026. According to reports, at least five GOP senators commented they could not support the current bill, which needed support from at least 50 of the 52 Republicans to move forward. Several senators voiced greater concerns about the bill following the CBO analysis.
The fight going forward will be over the reoriented subsidies and Medicaid. There is nothing explicit that allows states to waive out of anything new but the general waiver requirements process has been expanded.
Employers and Plan Sponsors will be pleased to note that this latest legislation leaves the employer/employee “exclusion” from taxation on group health benefits untouched. Taxing employee premiums is a major threat during this process as Congress looks to increase revenue for the measure. We’re also gratified that the “Cadillac Tax” on high cost health plans would continue to be delayed until 2025.
The House-passed American Health Care Act also included a provision that would delay implementation of the tax until 2025 (from the current law which would implement the tax in 2018).
Highlights of the BCRA
- Zeros out individual and employer mandates.
- Modifies but keeps the individual credits; ties credits to age bands (5) and reduces eligibility to families under 350% of poverty line (from 400 before), but if you have access to employer coverage, you are ineligible with no requirement that the employer coverage be “affordable.”
- Eliminates small business tax credit regime for health care insurance after 12/31/19 AND between now and then small business health plans are ineligible for the credit if they cover abortion services.
- Generally, repeals all of the taxes in effect after 12/31/17. The Medicare excise tax does not go away until after 12/31/2022, but net investment tax goes away effective 12/31/16.
- ACA HSA and FSA limits repealed so back to the $5,000 caps.
- Other HSA reforms are the same as in AHCA – increases the maximum contribution (to be equal to the plans out of pocket limits); allows spousal and catch-up contributions; and allows expenses incurred within 60 days of establishing an HSA to be covered. Does not deal with on-site medical clinic or telemedicine issue.
- Eliminates federal MLR rebate regime after next year, but requires each State to establish its own MLR regime with rebates.
- Most Significant Development: allows for the establishment of association health plans as large group plans for small businesses/individuals. These plans would be exempt from the community rating and essential benefit requirements imposed on small group and individual plans.
Should you have any questions or concerns please contact your AssuredPartners Benefits Team
Information contained herein is for educational and/or informational purposes only. The information provided may change over time as the laws and regulations change. This information is not, nor is it intended to be, legal advice and each employer or client should seek their own legal counsel for guidance regarding individual situations.