What the AHCA Means
The American Health Care Act (AHCA) bill passed in the House by a slim margin. While the passage signals change for our national healthcare program, the bill has a long way to go before it even reaches the Senate. One such hurdle is the Congressional Budget Office’s (CBO’s) ‘scoring’ of the bill – an estimation of the cost of the bill and how many people would receive coverage under it. To be sure, the scoring will have a huge impact on the fate of the AHCA, particularly in its current form.
How the AHCA Differs from the Affordable Care Act (ACA)
While the AHCA isn’t a complete repeal of the ACA, it does provide for significant changes in the current law that, while not directly affecting employer-sponsored plans, employers should be aware of:
- States could get waivers to allow insurers to charge individuals with pre-existing conditions who have had a lapse in coverage (exceeding 63 days) higher premiums (for at least 12 months). An additional $8 billion would be set aside over five years to help subsidize the resulting ‘high risk pools’.
- States could (re)define ‘essential health benefits’, which currently must include ambulatory patient services; emergency services; hospitalization; maternity and newborn care; mental health and substance use disorder services, including behavioral health treatment; prescription drugs; rehabilitative and habilitative services and devices; laboratory services; preventive and wellness services and chronic disease management; and pediatric services, including oral and vision care.
- Many subsidies for those who buy insurance through state and national exchanges would be less generous or eliminated altogether.
- Several taxes, including ones imposed on Americans with high incomes, health insurers, medical devices and tanning salons would be eliminated.
- There would be significant changes to Medicaid, including an end to the program’s expansion for states who didn’t expand the program by March 1, 2017; state-imposed work requirements for Medicaid recipients; as well as changes on how the program is financed and how benefits are paid, which could result in reduced individual benefits.
There would be good news, however, for employers – who provide health coverage for approximately 177 million (61% of) Americans – under the bill.
- Employers with 50 or more full-time equivalent employees (FTEs) wouldn’t have to provide minimum essential health care coverage or provide ‘affordable’ health coverage to these employees (and their dependents), as the penalty would be eliminated. Additionally, reporting and notification requirements would be simplified. Employers would still need to do the ACA reporting on Forms 1094 and 1095 (code sections 6055 and 6056 will not be repealed under AHCA).
- Individuals who don’t carry health insurance wouldn’t pay a financial penalty, however they could incur a one-year, 30% surcharge when/if they elect coverage again. This change would also ease employers’ reporting burden.
- The so-called ‘Cadillac Tax’ on employer-sponsored health plans exceeding $10,200 for individuals and $27,500 for family coverage would be delayed until 2026.
- Annual contribution limits for Health Savings Accounts (HSAs) would nearly double, and the tax for distributions non-medical expenses (like over-the-counter medications) would be reduced to 10% (from 20%).
- Annual limits on Flexible Spending Account (FSA) contributions would be repealed, and funds could be used to pay for over-the-counter medications)
What Can You Do Now?
Although the AHCA’s adoption is unlikely to occur this year, smart employers are proactively evaluating their healthcare offerings for the upcoming plan year, and engaging employees and their families to become healthier and to make better healthcare decisions. Our Pros can work partner with you to:
- Evaluate the cost and efficiency of your current plan options. Our Pros can quickly review your current plans, benchmark them against similar employers, and suggest options to improve costs and outcomes.
- Design and implement an effective wellness program. Having happy, healthy employees is good business – paying off in fewer claims, lower costs, reduced chronic conditions, absenteeism and turnover. Wellness programs help attract and retain talent – plus, they demonstrate your company cares about employees as people, not just workers.
- Communicate health care benefit options and engage employees in making better decisions. Do your employees really understand plan options available to them, and how to make the best decisions for themselves and their families? Do you get a lot of questions about benefits – or spend a lot of time amending employees’ decisions after confirmation statements are received? Our Pros can help you create or update your benefits communications and tools to better educate employees, facilitate decision-making, and simplify the enrollment process for you, too!
- Explore forming – or becoming part of – a captive. A captive is a special-purpose insurance company that underwrites the risk of its parent or affiliated groups. While a captive is similar to a traditional insurance company, it can’t sell coverage to the general public. The benefits of a captive are that the risk pool is controlled – which is great if your employees are generally healthy – and the operating costs are kept low by using stop-loss insurance.
HR Expertise On Demand
If you need assistance communicating with employees and families around health benefits and their choices, or arranging your health plan options, Mercer PeoplePro is here to help. When it comes to HR we’ve got you covered. We’ll even give you a two-hour consultation FREE. To set up your free consultation, visit PeoplePro — help is only a click away.