How ACA Employer Provisions Differ from the Republican Health Care Bills

By Stephen Miller, CEBS Jun 29, 2017
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The Republican majority in Congress and the Trump administration have made repeal and replacement of the Affordable Care Act (ACA) a top priority. In May, the House passed its replacement bill, the American Health Care Act (AHCA). In June, the Senate released its own bill, the Better Care Reconciliation Act (BCRA). A revised version of the Senate measure was made public on July 13.

If the Senate passes the BCRA, then both the Senate and House bills could go to a joint committee to be reconciled, or House leaders could choose to hold a vote on the Senate measure.

Details on key differences between how employer obligations are treated under current law and in the House and Senate bills are provided below:


Affordable Care Act
Current law.
American Health Care Act
The Republican House bill.
Better Care Reconciliation Act
The Republican Senate bill.
Individual Mandate:
Affordable Care Act
Adults are required to maintain minimum essential coverage through an employer plan or an individual-market policy, or pay a tax penalty.
American Health Care Act
Tax penalty reduced to zero. A premium surcharge to be applied on insurance purchased on the individual market following a break in coverage of more than 63 days.
Better Care Reconciliation Act
Tax penalty reduced to zero. Consumers who had a break in coverage for 63 days or more would be subject to a six-month waiting period before their new coverage begins.
Employer Mandate:
Affordable Care Act
Employers with 50 or more full-time employees or equivalents are required to provide ACA-compliant health insurance to employees working 30 hours per week or more, or to pay a tax penalty.
American Health Care Act
Tax penalty reduced to zero.
Better Care Reconciliation Act
Tax penalty reduced to zero.
Annual Information Reporting:
Affordable Care Act
Employers that provide health coverage are required to annually report to the IRS the employees/dependents who received coverage, and the number of hours that employees worked (including for variable-hour employees).
American Health Care Act
Employers would report to the IRS the employees who received minimum essential coverage. Presumably, no duty to track employee hours.
Better Care Reconciliation Act
Employers would report to the IRS the employees who received minimum essential coverage. Presumably, no duty to track employee hours.
Cadillac Tax:
Affordable Care Act
Starting in 2020, a 40-percent excise tax is imposed on the value of employer-sponsored health plans exceeding $10,200 for individual coverage and $27,500 for family coverage, indexed for inflation.
American Health Care Act
Cadillac tax delayed until 2026.
Better Care Reconciliation Act
Cadillac tax delayed until 2026.
Health Savings Accounts (HSAs) Contributions:
Affordable Care Act
Contributions limits for 2018 are $3,450 for self-only coverage and $6,900 for family coverage, plus a $1,000 catch-up contribution (age 55 or older).

Only the account holder may make a catch-up contribution.
American Health Care Act
Raises the annual HSA contribution limits to equal the out-of-pocket maximums that apply to high-deductible health plans (for 2018: $6,650 for self-only coverage and $13,300 for family coverage), plus $1,000 catch-up contribution (age 55 or older).

Allow spouses age 55 or older to make catch-up contributions to the same HSA.
Better Care Reconciliation Act
Raise the annual HSA contribution limits to equal the out-of-pocket maximums that apply to high-deductible health plans (for 2018: $6,650 for self-only coverage and $13,300 for family coverage), plus $1,000 catch-up contribution (age 55 or older).

Allow spouses age 55 or older to make catch-up contributions to the same HSA.
HSAs Restrictions:
Affordable Care Act
Tax on HSA distributions for nonmedical expenses is 20 percent.

HSA funds may not be used for over-the-counter medical items without a prescription.

HSAs may not reimburse expenses incurred before the account is established.
American Health Care Act
Tax on HSA distributions for nonmedical expenses is 10 percent.

HSA funds may be used for over-the-counter medical items.

HSAs may reimburse expenses incurred up to 60 days before the account is established if the individual was eligible to open an account during that period.
Better Care Reconciliation Act
Tax on HSA distributions for nonmedical expenses is 10 percent.

HSA funds may be used for over-the-counter medical items.

HSAs may reimburse expenses incurred up to 60 days before the account is established, if the individual was eligible to open an account during that period.

As revised in a draft bill released July 13, HSAs could be used to pay health insurance premiums.
Flexible Spending Accounts (FSAs):
Affordable Care Act
Limits the amount an employee may contribute to a health FSA, originally set at $2,500 then indexed for inflation (the 2017 limit is $2,600).
American Health Care Act
Removes contribution limit; employers may cap employee contributions.
Better Care Reconciliation Act
Removes contribution limit; employers may cap employee contributions.
Additional Medicare Payroll Tax:
Affordable Care Act
Imposes an additional 0.9 percent Medicare surtax on employee's wages above certain thresholds. Employers are required to withhold such amounts from an individual's wages.
American Health Care Act
Eliminates the Additional Medicare Payroll Tax.
Better Care Reconciliation Act
(As revised) keeps the Additional Medicare Payroll Tax in place.
Medicare Retiree Drug Subsidy:
Affordable Care Act
Allows federal subsidy for offering prescription drug benefits to Medicare-eligible retirees to be excluded from a company’s income but denies a tax deduction for drug benefits provided to Medicare-eligible former employees.
American Health Care
Reinstates prior law that allowed both the exclusion of the subsidy from income and the deduction for costs funded by the subsidy.
Better Care Reconciliation Act
Reinstates prior law that allowed both the exclusion of the subsidy from income and the deduction for costs funded by the subsidy.


Related SHRM Resource Page:

Health Care Reform Resources for Employers


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