Employers Back Latest Health Care Bills

House committee passes measures to further delay ‘Cadillac tax’ and ease HSA restrictions

Stephen Miller, CEBS By Stephen Miller, CEBS July 19, 2018
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Eleven health care bills that tweak the Affordable Care Act (ACA) and expand access to health savings accounts (HSAs) passed the House Ways and Means Committee last week. While half of the measures have bipartisan sponsorship, a political divide was evident: the bills received unanimous support from the committee's 24 Republicans (among those voting), with varying or no support from the committee's 16 Democrats.

To become law, the measures must be voted on and passed by the full U.S. House of Representatives and Senate before Congress adjourns in December, then sent to President Donald Trump for his expected signature. If not enacted, these proposals are likely to be reintroduce in the next Congress. The House was expected to vote on some of the bills before the end of July.

Some of the measures that expand qualified expenses under consumer-directed health accounts and a delay of the ACA's Cadillac tax enjoy the support of employer groups.

"SHRM applauds the House Ways and Means Committee for its consideration and passage of several health care bills relating to consumer-directed health plans, the ACA Cadillac tax and a moratorium of the employer mandate penalty," said Chatrane Birbal, the Society for Human Resource Management's (SHRM's) director of congressional affairs, health and employee benefits policy. "These proposed changes will provide employers with greater flexibility to design benefit offerings to meet the needs of their employees and their families [and] … retain and recruit talent."

The Ways and Means Committee summarized the bills as follows:

  • H.R. 4616, the Employer Relief Act, suspends the ACA's employer mandate penalty for health insurance coverage until Jan. 1, 2019, and delays the law's 40 percent excise tax on high-cost health plans—the Cadillac tax—until 2023. Republican sponsors.
  • H.R. 6199, the Restoring Access to Medication Act, reverses the ACA's prohibition on using tax-favored health accounts, such as HSAs and flexible spending accounts (FSAs), to purchase over-the-counter medical products. It adds menstrual care products to the list of qualified medical expenses for the purposes of these tax-favored health accounts. Bipartisan sponsors.
  • H.R. 6301, the Promoting High-Value Health Care Through Flexibility for High Deductible Health Plans Act, allows HSA-linked insurance plans to cover high-value, low-cost services and products like telehealth, chronic disease management, diabetic testing strips or primary care visits before users meet their deductibles. Bipartisan sponsors.
  • H.R. 6305, the Bipartisan HSA Improvement Act, allows spouses to contribute to family coverage HSAs, even if the spouse has an FSA, and lets employers offer certain services to HSA participants through onsite or retail clinics. Bipartisan sponsors.
  • H.R. 6306, the Improve the Rules with Respect to Health Savings Accounts Act, increases the contribution limits for HSAs, allows both spouses to make catch-up contributions to the same HSA and creates a new grace period for medical expenses incurred before the HSA was established. Republican sponsor.
  • H.R. 6309, the Allowing Working Seniors to Keep Their Health Savings Accounts Act, allows individuals over age 65 who are entitled to Medicare Part A to contribute to an HSA. Republican sponsor.
  • H.R. 6311, the Increasing Access to Lower Premium Plans Act, modifies the ACA's premium tax credit for low and moderate earners, which is currently available only for bronze, silver, gold or platinum health plans bought on a government-run ACA exchange, so the credit applies to "catastrophic" copper plans and to qualified plans purchased outside of the exchanges. It would also allow individuals to purchase a lower-premium copper plan outside of the exchanges. Republican sponsors.
  • H.R. 6312, the Personal Health Investment Today Act, allows sports and fitness expenses, such as gym memberships or exercise classes, to be consider qualified medical expenses, enabling people to use HSAs and FSAs to pay for them. Qualifying expenses would be capped at $500 a year for individuals and $1,000 for joint filers. The bill also allows people to use tax-preferred accounts, within limits, to cover the cost of their children's school sports programs. Bipartisan sponsors.
  • H.R. 6313, the Responsible Additions and Increases to Sustain Employee Health Benefits Act, allows users to carry over any remaining balance in their FSAs to the next year. Bipartisan sponsors.
  • H.R. 6314, the Health Savings Act, expands eligibility and access to HSAs by allowing plans categorized as "catastrophic" and bronze in the ACA exchanges to qualify for HSA contributions. Republican sponsors.
  • H.R. 6317, the Primary Care Enhancement Act, protects HSA-eligible individuals who participate in a direct primary care (DPC) arrangement from losing their HSA eligibility and allows DPC provider fees to be covered with HSAs. Bipartisan sponsors.

In addition, SHRM supports H.R. 3919, the Commonsense Reporting Act, which would simplify ACA employer health coverage reporting. That measure was referred to the Ways and Means Committee last October and is awaiting action. SHRM has encouraged HR professionals to contact and describe to their Congress members how the reporting requirements have created administrative burdens for employers.

Cadillac Tax and Employer Mandate Delays

SHRM has long advocated for the repeal of the Cadillac tax. Short of that goal, "we are pleased that the committee has passed a proposal to delay the ACA excise tax an additional year, until 2023, and look forward to working with Congress to fully repeal the tax in the future," Birbal said.

While the delay will provide much-needed relief to employers and employees, "HR professionals and their organizations have already begun restructuring their health care benefit to avoid the tax" by increasing co-pays and deductibles, for instance. Failing to repeal the tax entirely "could even cause some to decline offering employer-provided health care," Birbal noted.

SHRM also supports a moratorium of the employer mandate penalty through 2018 "but looks forward to working with Congress to repeal the mandated employer coverage and reporting requirements, which are an administrative and financial burden to employers," she said.

"We encourage the committee to go even farther by fully repealing the ACA's employer mandate and Cadillac tax, both of which strain employer resources and impose greater out-of-pocket costs on working families," said James Klein, president of the American Benefits Council, an employers group.

The Alliance to Fight the 40/Don't Tax My Health Care, an employers' coalition that advocates repeal of the Cadillac tax, issued a statement that said, "Delaying this tax for one additional year is a step in the right direction. Until we achieve a full and permanent repeal of this tax, 178 million Americans will continue to be threatened by shrinking benefits and higher out-of-pocket costs and other negative results of this onerous tax."

[SHRM members-only toolkit: Managing Health Care Costs]

Boosting Consumerism

"SHRM fully supports the repeal of the restrictions on the use and limits on contributions to health savings accounts and flexible spending accounts," Birbal said. As health costs have increased for workers and employers alike, HSAs and FSAs "can enable thousands of businesses to continue offering employment-based health coverage."

Likewise, the American Benefits Council "applauds efforts to increase HSA contributions and expand HSA-eligible coverage for working seniors and spouses with health flexible spending accounts," Klein said. "Approval of these measures would be a helpful first step toward increased take-up [of consumer-directed accounts] by employees."

Opportunities to make lasting, bipartisan health reforms are rare, Klein added. "Expanding use of HSAs is another area where Congress can think big and further strengthen employer-sponsored health coverage, specifically by providing meaningful HSA-eligible coverage to individuals with chronic conditions, users of telehealth services, and patients at onsite and near-site health clinics."

Related SHRM Articles:

Millennials Bring Online Consumer Behaviors to Health Care, SHRM Online Benefits, July 2018

Law Changes Needed to Fix HSAs, Advocates Tell Congress, SHRM Online Benefits, June 2018

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