Insights: Article

U.S. House Passes American Health Care Act of 2017

May 05, 2017

On Thursday, May 4, 2017, the House passed the revised AHCA bill (H.R. 1628) with the "yes" votes coming in at 217, one vote more than the 216 needed. Now it's the Senate's turn to decide whether they will accept H.R. 1628 as written, or make amendments to the bill. 

Future Still Uncertain

While this is a victory for the Trump Administration, repealing the Affordable Care Act (ACA) is not a done deal and could very well not happen at all, depending on the amendments made to H.R. 1628 as it is debated in the Senate. 

There has been a lot of pre-planning to structure the voting rules in the Senate to come under the budget reconciliation process, which would enhance the opportunity of passing H.R. 1628 in the Senate. Under the budget reconciliation process, debate is limited, protecting the bill from filibuster, and 51 "yes" votes will be needed to pass H.R. 1628. Normal Senate rules require 60 "yes" votes to pass legislation. Currently there are 52 Republican Senators and 48 Democratic Senators; however, in the event of a 50/50 tie vote, Vice-President Pence can cast the deciding vote. Ironically, the lower vote requirement budget reconciliation process was the same process that was instrumental in passing the ACA through the Senate in 2010.

But, gathering 51 "yes" votes to pass H.R. 1628 creates a challenge for the Senate leadership and the Trump administration. Plus, if the Senate, as anticipated, amends H.R. 1628 to get it to pass the Senate, their version of H.R. 1628, would then need to be passed in the House, which would undoubtedly test the ability to hold that voting group together for a second time.

Details of the Bill

Although there is work still to be done, here are some key points in H.R. 1628:

  1. Elimination of the employer and individual insurance mandates (effective for months beginning after Dec. 31, 2015)
  2. Elimination of taxes on medical devices, prescription medication, health insurance, tanning, health savings accounts, and repeal of the net investment income tax and the Medicare surtax (effective for tax years beginning after Dec. 31, 2017)
  3. Repeal of subsidies from the exchanges (effective for taxable years beginning after Dec. 31, 2019)
  4. Provide refundable tax credits that will be based on age and income for those who do not have employer-sponsored insurance (effective for years beginning after Dec. 31, 2019)
  5. Imposes penalties for individuals who do not maintain continuous coverage (beginning in 2019, or in some instances beginning in 2018)
  6. Allow states to apply for waivers to allow them to charge individuals more for pre-existing conditions
  7. Maintains the requirement that children up to age 26 be allowed on their parents' policy
  8. Allow states to decide whether or not to maintain the essential health benefits (which is a requirement under the ACA) or modify this requirement in their state
  9. Reduce Medicaid funding in 2020 for states that opted to expand Medicaid under the ACA. Future Medicaid expansion is not available for states that didn't already expand Medicaid 
  10. Allow insurers to charge older individuals higher premiums using a scale of five to one instead of the current three to one scale (applies to plan years beginning after Jan. 1, 2018)
  11. Repeals the tax on employee health insurance premiums and health plan benefits, the "Cadillac" plan tax (effective for any tax period beginning after Dec. 31, 2019, and before Jan. 1, 2025)

Continue ACA Compliance

While the repeal and replacement of the ACA appears to have taken the first step, our advice to clients is still unchanged: Keep following current ACA law until the AHCA is signed into law and becomes effective.    

If you have questions on the current ACA requirements or the pending AHCA changes and tax reform issues, please contact your Eide Bailly professional or a health care reform specialist.

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