AHCA bill passes House and is headed to the Senate
The U.S. House of Representatives voted to pass an amended version of the American Health Care Act – the largely Republican-backed replacement for the Affordable Care Act – on May 4. The tally was a close one, but the legislation now moves onto the Senate for its own referendum.
Let's take a closer look at what's included in the latest iteration of the AHCA:
Rolling back critical mandates
Two of the largest and most fought-for components of the ACA were the employer and individual mandates. Not only did companies with more than 50 full-time employees have to provide healthcare to their workers, but any individual not insured by an employer-sponsored plan had to purchase coverage from an ACA marketplace. Failing to comply with either of these mandates would result in hefty financial penalties for employers and individuals alike.
While the Obama administration stood firmly behind these rules, Republican lawmakers were strongly opposed. The amended AHCA essentially eliminates both mandates by getting rid of the fines for non-adherence. Companies and individuals that don't comply with these specific ACA rules will face no fines for the 2016 reporting year, giving them no real reason to comply moving forward.
The employer and individual mandates are a large focus of the bill, but the requirement to provide minimum-value and affordable coverage would likely remain, according to the Society for Human Resources Management.
"The AHCA aims to reduce funding for states that expanded their Medicaid coverage."
Substantial Medicaid changes
Under the ACA, states had the ability to extend Medicaid coverage to people with household incomes below 133 percent of the federal poverty level. This change enabled around 11 million adults to become eligible for the government-sponsored benefit, according to the Kaiser Family Foundation.
The AHCA would gradually reduce the federal funding for states who took this action, as well as put a limit for money directed to the program in general. Instead, states would have the option to either get a particular amount for each person utilizing Medicaid or could receive the funds in a block grant.
A push for tax credits
The ACA offers financial assistance for insurance policies based on a person's income. These subsidies can fluctuate on a monthly basis when they're sent to the insurance provider. While the AHCA would continue these tax credits, the amount and the way they're calculated would differ, according to NPR.
Instead of basing the government assistance on insurance costs in the area and yearly earnings, the AHCA's credits would depend on a person's age. As Republican lawmakers see it, young people usually have fewer health needs and expenses, so coverage would be less expensive for this group than older, more at-risk adults. The bill offers anywhere from $2,000 to $4,000 per year in tax credits to individuals and up to $14,000 for families. Under the ACA, insurance companies cannot charge older people more than three times what they charge younger adults. Under the ACHA, coverage can be five times more expensive older versus younger citizens, according to The New York Times.
It's crucial for benefits professionals and managers to be aware of the potential changes to healthcare law that could impact their employer-provided coverage and workers themselves.