In an effort to win support from a handful of wavering colleagues, Republican senate leaders released on Monday a revised healthcare bill. There were slight tweaks, the most significant of which is a new provision to encourage Americans to maintain continuous healthcare coverage that would replace Obamacare's individual mandate, but nothing for employers has changed from the draft released last week.
The bill's big change will affect people who let their insurance lapse. Those individuals will have to wait about six months after applying for new insurance before that policy could take effect. That new restriction, its authors hope, will prevent individuals from seeking coverage only when they are near or ready to filing a claim.
That new restriction, its authors hope, would prevent individuals from seeking coverage only when they are near or ready to filing a claim. It would serve the same purpose as the ACA’s “individual mandate” that imposed a tax penalty on uncovered individuals.
The new provision released on Monday could also make private insurers less reluctant to participate in the individual market, since they would be less likely to face a surge of claims from individuals when they become seriously ill.
The employers, the GOP bill includes several of the business-friendly measures included in the House healthcare bill — the American Health Care Act — passed in early May, including the end of the employer mandate and a further pushing off of the Cadillac tax on high-end healthcare policies.
The bill also preserves a sacrosanct element of employer-based health insurance — the ability to pay premiums pre-tax. “On the whole, we’re pleased the legislation does little or no violence to the employer-sponsored marketplace,” says Joel Wood, vice president of government affairs at the Council of Insurance Agents and Brokers.
The employer mandate under the Affordable Care Act requires companies with 50 employees or more to provide insurance that is affordable and of “minimum value” to their workers. The Senate draft reduces the penalty for failing to comply to zero, effectively ending the rule.
But the issue is essentially moot for mid-sized and large employers, says Chatrane Birbal, senior adviser, government relations, at the Society for Human Resource Management. Her reasoning is that more than 90% of SHRM members offered health insurance to employees before the Affordable Care Act went into effect.
According to SHRM research, benefit offerings are the second biggest reason employees look for another job, behind salary.
Essential benefits
The current ACA requires fully insured health plans to cover 10 “essential benefits,” including ambulatory patient services, emergency services, hospitalization, maternity and newborn care, and mental health and substance use disorders.
The Senate draft loosens these requirements by making it easier for states to get waivers to drop areas of coverage. For most larger companies, the issue is again moot. They already supply health insurance with robust coverage to keep their workers happy. “Most of our membership offered many of these benefits before ACA, and we don’t foresee a mass exodus,” Birbal says.
The Senate draft continues Obamacare rules against caps on deductibles and benefit payout but again gives states some flexibility to request waivers.
Cadillac tax
Senate Republicans have pushed the dreaded Cadillac tax out to 2026 but few experts expect it will ever be enforced. It requires a 40% excise tax on employer-sponsored health plans that exceed $10,200 for individuals and $27,500 for families. So why keep it at all? Its authors need to propose a revenue stream to get a more favorable Congressional Budget Office (CBO) score for the cost of the bill, says Garrett Fenton, a healthcare attorney at Miller & Chevalier in Washington.
Employer reporting requirements
ACA reporting requirements for companies remain in the new Senate bill. The ACA requires larger companies to file reports to the IRS outlining the health coverage they provide to each employee. They must also furnish the same information to workers. SHRM calls the requirement burdensome and is lobbying Congress to drop them.
Given conservative animosity toward government regulation, it is expected these rules would likely disappear in a final version of the legislation.
Health savings accounts
The bill keeps all the provisions from the House of Representatives’ healthcare bill that increases the benefits of health savings accounts, which is good news for employers and employees. Under the plan, individuals can put $6,550, up from $3,400, and families can put $13,100, up from $6,550, into a tax-free HSA.
It also makes the accounts more flexible by: allowing both spouses to make catch-up contributions to one HSA beginning in 2018, letting people use their HSAs to pay for over-the-counter medications, which was restricted under the ACA and lowering the tax penalty if you use an HSA to pay for unqualified medical expenses to 10%, from 20%.
