Congressional Republicans unveiled yesterday their sweeping counter-approach to 2010's Affordable Care Act (ACA). The GOP concept appears to presume a complete repeal of the ACA, including its individual and employer mandates and the widely vilified excise tax on high-value health coverage (the so-called "Cadillac Tax") that Congress recently delayed two years, to 2020.
Perhaps to partly offset the loss of tax revenue the Cadillac Tax was expected to generate, the GOP plan would treat the value of employer-provided health insurance as a taxable fringe benefit once the value of the coverage exceeds a yet-to-be-described cap.
In particularly welcome news, the GOP plan would unwind legislatively the Equal Employment Opportunity Commission's new and complex regulations relating to
workplace wellness programs. A recent Lockton Alert and webcast summarized those
new rules.
Here are some of the key elements of the Republicans' health reform platform:
- Eliminate the employer mandate and its complicated administrative schemes,
including the complex IRS reporting process.
- Eliminate the individual mandate.
- Eliminate the Cadillac Tax and replace it with a rollback of the exclusion, for income and payroll tax purposes, of the value of employer-provided health insurance, to the extent that value exceeds a cap. The cap would be adjusted for age and to account for geographical differences in the cost of medical insurance. Unlike the Cadillac Tax, the GOP proposal would not count the value of health savings account (HSA) contributions against the cap.
Speaking of HSAs, the GOP proposal would:
- Allow spouses to make catch-up contributions to the same HSA account.
- Allow qualified medical expenses incurred before HSA-qualified coverage begins to be reimbursed tax free from an HSA account as long as the account is
established within 60 days after the expense was incurred.
- Set the maximum contribution to an HSA at an amount equal to the sum of the
maximum annual deductible and out-of-pocket expense limits.
- Expand accessibility for HSAs to certain groups, like those who get services
through the Indian Health Service and TRICARE.
While IRS guidance under the ACA bars employers from using health reimbursement arrangements (HRAs) to reimburse employees' premium costs for individual coverage, the GOP proposal would permit HRAs to make such reimbursements.
To help individuals without access to employer-based health insurance buy coverage on
the market, the GOP proposal would replace the ACA's tax credits for purchasing coverage in online public health insurance marketplaces with monthly advance refundable tax credits the individual could use to purchase any policy available to him or her. The GOP plan would allow individuals to buy policies across state lines.
Lastly, the GOP plan would change the way Medicaid is funded, transition Medicare eligibility age over time so that it mirrors the age at which unreduced Social Security benefits are available, and facilitate the ability of small businesses to band together for health insurance purposes, pooling their risks and leveraging economies of scale.
House leaders don't expect to start the legislative engine on their new proposal until next year, after the elections, and the prospects for enactment will of course be dimmed if not entirely derailed by a Hillary Clinton victory in November.
Source: The Lockton Companies
Not Legal Advice: Nothing in this Alert should be construed as legal advice. Lockton may not be considered your legal counsel and communications with Lockton's Compliance Services group are not privileged under the attorney-client privilege.