House Republicans on Monday released their American Health Care Act proposal, an Obamacare replacement geared toward downsizing the government’s role in helping lower-income Americans access coverage while dismantling other facets of the Affordable Care Act as well.
Under the 123-page proposal, which was scheduled to be voted on beginning Wednesday, coverage will still exist for individuals with preexisting conditions and for children under their parents’ (or their legal guardians’) policies until age 26. The AHCA bill will also continue Medicaid expansion until 2020.
However, a number of ACA provisions would be repealed under the AHCA, including the individual mandate—it’s replaced by a continuous coverage clause—the employer mandate, and various taxes implemented under Obamacare.
A fair share of “adjustments” to the current healthcare law are noteworthy as well.
Among other things, the AHCA proposes to provide tax credits based on age, add limits for high-income earners, remove cost-sharing subsidies, cancel tax credits for plans that include abortion coverage, and add a premium cost ratio (so that older people can be charged up to five times what younger people are charged, instead of three times).
Here are more specifics highlighting the paraphrased sections above:
• SEC 05 Individual Mandate states no individual penalty effective Dec 31, 2015
• SEC 06 Employer Mandate states $0 effective Dec 31, 2015
• $2,000 for individuals under age 30 at the beginning of the taxable year
• $2,500 for individuals under 40
• $3,000 for individuals under 50
• $3,500 for individuals under 60
• $4,000 for individuals over 60
Tax Credit Adjustments
• Credit is reduced by 10 percent of amount of AGI over $75,000 and $150,000 if married filing jointly
o $75,000 limit increases with inflation
• Up to five oldest individuals in the household receive credit
• Total amount can’t exceed $14,000 per year
Subtitle D, Sec 131 – Repeal of cost-sharing subsidy, effective 2020
Health Savings Accounts
• SEC 7530 Excess tax credits can be paid to an HSA
• SEC 16 HSA contribution limits increased to amount of deductible and out-of-pocket limitation
• SEC 18 If a medical expense occurs before establishment of an HSA account, there’s a 60-day window to create the account and apply the expenses
Sec 2711 Encouraging Continuous Health Insurance Coverage
• 30% penalty if lapse in coverage, lasts 12 months
• Begins plan year 2019
• 63-day grace gap
Premium Cost Ratios
Sec 135 Change in Permissible Age Variation in Health Insurance Premiums Rates
• Change the age ratio from 3 to 1 to 5 to 1
Obamacare Tax Changes
SEC 08 Repeal of tax on over-the-counter medications
• OTC meds now eligible for HRA reimbursements
• Effective taxable years after Dec 31, 2017
Repeal and Replace of Health-Related Tax Policy
• SEC 02
o Credits can be obtained whether or not policy is purchased on an official exchange
o No tax credits for plans that include abortion coverage