On March 6, 2017, the U.S. House of Rep­re­sen­ta­tives Ways and Means Com­mit­tee released a pro­posed bud­get rec­on­cil­i­a­tion bill, enti­tled the Amer­i­can Health Care Act, to replace por­tions of the Afford­able Care Act (ACA). If enact­ed, the Amer­i­can Health Care Act would pro­vide some relief from pro­vi­sions of the ACA for employ­ers and make oth­er sig­nif­i­cant changes to employ­ee ben­e­fits. While the pro­pos­al is 53 pages long and cov­ers a range of tax and ben­e­fit changes, below is a sum­ma­ry of key pro­vi­sions impact­ing employ­ers and employ­ee benefits.

Employer and Individual Mandates

The pro­pos­al effec­tive­ly elim­i­nates the employ­er and indi­vid­ual man­date by zero­ing out penal­ties for an employer’s fail­ure to offer, and an individual’s fail­ure to obtain, min­i­mum essen­tial cov­er­age retroac­tive to Jan­u­ary 1, 2016.

Health Care Related Taxes

The pro­pos­al extends the applic­a­ble date for the “Cadil­lac tax” from 2020 to 2025 and repeals the med­ical device tax, over the counter med­ica­tion tax, indoor tan­ning sales tax, and Medicare hos­pi­tal insur­ance sur­tax begin­ning in 2018.

Reporting Requirements

Because the pro­pos­al is through a bud­get rec­on­cil­i­a­tion process, employ­er report­ing require­ments for report­ing offers of cov­er­age on employ­ees’ W‑2s can­not be repealed; how­ev­er, the pro­pos­al cre­ates a sim­pli­fied process for employ­ers to report this infor­ma­tion that, accord­ing to the House Ways and Means Committee’s sec­tion-by-sec­tion sum­ma­ry, makes the cur­rent report­ing redun­dant and allows the  Sec­re­tary of the Trea­sury to cease enforc­ing report­ing that is not need­ed for tax­able purposes.

Contribution Limits

Addi­tion­al­ly, the pro­pos­al elim­i­nates the cap on con­tri­bu­tions to flex­i­ble spend­ing accounts (FSAs) and almost dou­bles the max­i­mum allow­able con­tri­bu­tions to health sav­ings accounts (HSAs) by allow­ing con­tri­bu­tions of $6,550 for indi­vid­u­als and $13,100 for fam­i­lies begin­ning in 2018. This aligns the HSA con­tri­bu­tion amount with the sum of the annu­al deductible and out-of-pock­et cost expens­es per­mit­ted under a high deductible health plan. The pro­pos­al also allows both spous­es to make catch-up con­tri­bu­tions to one HSA begin­ning in 2018.

Patient Protection Provisions

Final­ly, the pro­pos­al retains some key patient pro­tec­tion pro­vi­sions of the ACA by con­tin­u­ing to pro­hib­it insur­ers from exclud­ing indi­vid­u­als with pre-exist­ing con­di­tions from obtain­ing or pay­ing more for cov­er­age and con­tin­u­ing to allow chil­dren to stay on their parent’s plan to age 26.

What Employers Should Know Now

We are still in the first round of the new government’s strat­e­gy to repeal and replace the ACA. The Con­gres­sion­al Bud­get Office will next review and score the plan before it goes back to the House and the Sen­ate for full votes before mak­ing it to Pres­i­dent Trump’s desk for approval. This will take time.

In the inter­im, the pro­vi­sions of the ACA still apply. While applic­a­ble large employ­ers may not be assessed penal­ties for fail­ing to offer min­i­mum essen­tial cov­er­age to employ­ees if the pro­pos­al is even­tu­al­ly enact­ed, please note that employ­ers are still oblig­at­ed to report offers of cov­er­age and should final­ize their ACA report­ing for the 2016 tax year if they have not com­plet­ed their e‑filing with the IRS (due March 31, 2017).

By Nicole Quinn-Gato, JD
Orig­i­nal­ly pub­lished by www.thinkhr.com