What is in the Senate Healthcare Bill?

Overview:

  • Added Restrictions for Premium Tax Credits to go into effect in 2020
  • Modifications to Limitations on Premium Assistance Amounts
  • Elimination of Eligibility Exceptions For Employer Sponsored Coverage in 2020
  • Retroactive Elimination of Individual Mandate and Employer Mandate Penalties
  • Employer Reporting Requirement in place until at Least 2020
  • Funding for Cost Sharing Reduction Payments through 2019
  • Longer Phase out of Medicaid Expansion
  • Elimination of Tax Credits for plans that cover abortion
  • Repeal of all Obamacare taxes with the exception of the Cadillac Tax

The Senate released their draft version of the Obamacare repeal and replace bill on Thursday June 22nd.  The Bill is being referred to as the “Better Care Reconciliation Act of 2017” and differs in many ways from the House Bill that was passed in May of this year. Below are more details on what is contained in this Bill.

Added Restrictions to Premium Tax Credits

Under the ACA, individuals who earn a household income of 100% to 400% of the Federal Poverty Line (FPL) can be eligible for a premium tax credit. The House Bill Changes the 400% cap and lowers it to 350%. Rules are also in place to alter the eligibility of Tax Credits for aliens, changing the language from “Lawfully Present” to “Qualified Alien”. This would be affective in tax years beginning after December 31, 2019.

Modifications to Limitations of Premium Assistance Amounts

Under the ACA, Premium Assistance Amounts are determined by reference to the “applicable second lowest cost silver plan” found on the exchange. This language is being replaced by the wording “applicable median cost benchmark plan”. An “applicable median cost health plan” is the qualified health plan that is offered in the individual market in the rating area in which the taxpayer resides.

Additionally, unlike the House Bill, the Senate Bill takes into account taxpayer income along with age in their determinations of premium assistance amounts.

Elimination of Eligibility Exceptions for Employer Sponsored Coverage in 2020

Effective in tax years beginning after December 31, 2019, the House Bill removes special rules for employer sponsored Minimum Essential Coverage (MEC) under the ACA. What this means is the elimination of the 9.5% affordability requirement imposed on employer provided plans. This also removes the requirement for employer sponsored health plans to provide Minimum Value (MV). 

Retroactive Elimination of Individual Mandate and Employer Mandate Penalties

Perhaps one area in which the Senate Bill mirrors the House Bill is regarding the elimination of Individual Mandate penalties along with Employer Mandate penalties. These are both effective for tax years beginning after December 31, 2015.

Employer Reporting Requirement in place until at Least 2020

Even though the Employer Mandate Penalties go to $0.00 retroactively. The ACA’s Premium Subsidies will stay in place until 2020. Eligibility for these credits will change (see above) but they will still be based on the affordability and quality of the coverage offered by employers. This means that Employers will still need to report. The reporting requirement is expected to be enforced by the “Failure to File Timely Informational Returns” penalties by the IRS.

In the same vein, employers are also still expected to track their employees FT/PT status for the purposes of reporting benefit eligibility. Employers who opt to not offer coverage because an inability to track eligibility accurately are at risk of discrimination accusations for healthcare coverage.

Funding for Cost Sharing Reduction Payments through 2019

These cost sharing reduction payments are made to the Insurers. Insurers have been in the news a lot lately pleading for money to cover ACA payments. The Senate Bill funds those payments through 2019.

Longer Phase out of Medicaid Expansion

The House Bill that was passed in May proposed an end of funding for Medicaid expansion starting in the year 2020. Moderates have been pushing very hard for a 7-year phase out. The Senate Bill puts forth a proposed phased out starting in the year 2021 with the goal of restoring funding to pre-ACA levels by the year 2024.

Elimination of Tax Credits for plans that cover abortion

This was similar to what was proposed by the House Bill. However, there is talk that this may not fit within the rules of Senate Budget Reconciliation, and may need to be removed.

Repeal of all Obamacare taxes with the exception of the Cadillac Tax

Some of the repealed/altered taxes in the Senate Bill Include: Tax on Employee Health Insurance Premiums, Tax on Over-the-Counter Medications, Tax on HSAs, Limitations on contributions to FSAs, Tax on Prescription Medication, Medical Device Tax, Chronic Care Tax, Medicare Part D Subsidy, Medicare Tax Increase, Tanning Tax and Net Investment Tax.

 

In addition to the items above, pg. 121 of the draft bill found here, also outlines new rules governing small business risk sharing pools.

In conclusion the Senate Bill is projected to be reviewed by the CBO and scored by Monday 6/26 at the earliest. After this the Senate hopes to bring this Bill to a vote prior to the July 4th recess.

As of the time of this writing, four Republican Senators have publicly stated objections to this Bill. This is two more than the GOP led Senate can afford assuming Vice President Pence breaks a tie in favor of the GOP.

Please stay tuned for updates.