Vote on The American Health Care Act Canceled in the House of Representatives

By Chatrane Birbal Mar 24, 2017
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​The House of Representatives was scheduled to vote on H.R. 1628, the American Health Care Act (AHCA) today, Friday, March 24. However, after negotiations to garner the support of conservative and some moderate GOP lawmakers did not result in a final deal, the vote was canceled. House Republicans needed to secure the support of 215 lawmakers out of their 237 member caucus to pass the bill.  This meant that Republicans could only lose 22 votes in order to pass the bill out of the chamber. On Friday afternoon just hours before the scheduled vote Speaker Paul Ryan (R-WI) visited the White House to tell President Donald Trump that the bill lacked the votes necessary for passage.

As we go to press with this week's HR Issues Update, the future of H.R. 1628 looks challenging. In a press conference following the canceled vote Speaker Ryan said "Obamacare is the law of the land and we'll be living with this law [ACA] for the foreseeable future."  Furthermore, Speaker Ryan said that the Republican Conference will proceed with its agenda and will now turn its attention to other priority issues like tax reform.

Congress, however, is still likely to consider targeted legislative proposals to make modifications to the ACA.  In addition we could expect to see regulatory changes. The White House posted a document indicating that the AHCA was the first step in a three-step plan to repeal and replace the ACA. In short, (1) pass the American Health Care Act, (2) make additional changes to the rules that govern the ACA through the regulatory process and (3) pass other health care legislation to address the elements of the ACA that need reform.  

H.R. 1628 the American Health Care Act, was designed to replace tax elements of the Affordable Care Act (ACA).  As previously reported, the American Health Care Act was created under the budget reconciliation process and requirements and is limited in its scope to amend only the tax provisions of the ACA.

Key provisions of interest to the HR profession and the workplace, which were included in H.R. 1628 as of March 24: 

  • Reduces Employer Mandate Penalty - Under current law, certain employers are required to provide health insurance or pay a penalty. This bill would reduce the penalty to zero for failure to provide minimum essential coverage. The employer mandate will remain and would have to be repealed through future legislation. The effective date would apply beginning after December 31, 2015, providing retroactive relief to those impacted by the penalty in 2016.

  • Reduces Individual Mandate Penalty - Under current law, most individuals are required to purchase health insurance or pay a penalty. This bill would reduce the penalty to zero for failure to maintain minimum essential coverage. The individual mandate will remain and would have to be repealed through future legislation. The effective date would apply beginning after December 31, 2015, providing retroactive relief to those impacted by the penalty in 2016.

  • Creates a Continuous Coverage Requirement Surcharge -This bill creates a new continuous coverage requirement surcharge. To avoid a 30 percent premium surcharge, individuals must prove that they did not have a gap in creditable coverage beyond 63 continuous days during the 12 months preceding coverage. Individuals aging out of dependent coverage must prove that they enrolled during the first open enrollment period after which dependent coverage ceased. The penalty does not vary by health status but would be greater for older individuals since premiums may vary with age. The penalty lasts for the remainder of the plan year for special enrollments during 2018, and for the 12-month period beginning with the first day of the plan year for 2019 and succeeding years.

  • Delays Excise Tax On High-Value Health Care Plans – The ACA imposed a 40 percent excise tax on high cost employer-sponsored health coverage to benefits exceeding certain thresholds ($10,200 for individual coverage and $27,500 for family coverage). Under current law, the tax is scheduled to go into effect in 2020. This bill changes the effective date of the tax for taxable periods beginning after December 31, 2025.

  • Repeals the Health Insurance Tax – The ACA imposed an annual fee on certain health insurers. The proposal repeals this health insurance tax beginning after December 31, 2016 and would be retroactive.

  • Repeals Increase of Tax on HSAs – The ACA increased the percentage of the tax on distributions that are not used for qualified medical expenses to 20 percent. This bill lowers the rate to 10 percent. The bill also allows individuals to use HSA funds for over-the-counter medical items. This change is effective for distributions after December 31, 2016 and would be retroactive.

  • Repeals the Limit on Contributions to FSAs – The ACA limits the amount an employer or individual may contribute to a health Flexible Spending Account (FSA) to $2,500, indexed for cost-of-living adjustments. This bill repeals the limitation on health FSA contributions for taxable years beginning after December 31, 2016 and would be retroactive.  The bill also allows FSAs to reimburse over-the-counter medications also beginning in 2017 and would be retroactive.

The bill did not propose to repeal the ACA insurance reforms, including the following health plan requirements:

  • Coverage of preexisting conditions;
  • Guarantee availability and renewability of coverage;
  • Coverage of adult children up to age 26;
  • Cap out-of-pocket expenditures;
  • Prohibitions against health status underwriting, lifetime and annual limits, and discrimination on the basis of race, nationality, disability, age, or sex.

Meanwhile, phase three of the plan to repeal and replace the ACA is underway in the U.S. House of Representatives. 

This week, the chamber passed H.R. 1101, the Small Business Health Fairness Act by a vote of 236 to 175. The bill was introduced by Representatives Sam Johnson (R-TX) and Tim Walberg (R-MI). This bill is not part of the budget reconciliation process and will require 60 votes in the Senate for passage. Specifically, H.R. 1101 amends the Employee Retirement Income Security Act of 1974 (ERISA) to provide for the establishment and governance of association health plans (AHPs), which are group health plans sponsored by business associations. This proposal would allow small businesses to join together through AHPs to provide their employees greater access to affordable health care. 

Read SHRM's HR Daily Newsletter for more coverage. For more information, see the House Education and Workforce Committee press release on the passage of H.R. 1101.

As Congress and the regulatory agencies take action on ACA reforms, SHRM will continue to advocate in support of the employer-sponsored system. Stay tuned to future editions of HR Issues Update for timely and relevant updates on this important issue for HR practitioners.

  

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