As we posted May 4, in the first step toward repealing and replacing the Affordable Care Act (ACA), the U.S. House of Representatives passed the American Health Care Act (AHCA). The bill is now with the U.S. Senate to begin deliberations.
Until this legislation is passed by the U.S. Senate and signed into law by President Trump, all existing ACA requirements remain in effect, including penalties for noncompliance.
If signed into law, the AHCA in its current version would change key features of the ACA over the next three years. Specifically:
- “Pay or Play”: Penalties for noncompliance with the “pay or play” coverage requirement (where employers with 50+ full-time employees generally must offer affordable, minimum value coverage or pay a penalty tax) are zeroed out. However, Form 1094 Transmittal of Employer-Provided Health Insurance Offer & Coverage and Form 1095 Health Insurance Marketplace Statement reporting requirements are not changed.
- Individual Mandate: Penalties for noncompliance with the individual mandate are zeroed out, effectively repealing the mandate. In its place, the bill requires issuers in the individual or small group markets to impose a 30% penalty on the health insurance premiums of individuals who do not maintain continuous health insurance coverage.
- HSA Contribution Limits: Limits on contributions to Health Savings Accounts (HSAs) are increased to equal the inflation-adjusted annual out-of-pocket expenses limitation imposed on high deductible health plans. For 2017, this is $6,550 for self-only coverage or $13,100 for family coverage – rising in 2018 to $6,650 and $13,300, respectively.
- Health FSA Contribution Limits: Limits on contributions to health flexible spending arrangements (a.k.a. Health FSAs) are eliminated.
- Tax Credits for Individual Coverage: Replaces the ACA’s premium tax credits for individual market coverage with refundable tax credits adjusted for both age and income.
We will continue to provide you updates on this important legislation as it works its way through the federal government. In the meantime, call Basi Insurance Services at 209-847-3065 if you have any immediate questions.
A copy of the American Health Care Act in its entirety is available on the U.S. Congress website.