As you have probably heard, House Republicans recently released a proposal, which some have labeled “TrumpCare,” that would make major changes to the Affordable Care Act (aka ObamaCare). While some Republicans have criticized the proposal known as the American Health Care Act, as not changing ObamaCare enough, even referring to it as “ObamaCare Lite,” the proposal does make some pretty significant changes to the Affordable Care Act that employers should be aware of. Some of these include:
• Repealing the mandate that employers provide health insurance to their employees. Currently, ObamaCare requires employers with 50 or more employees to provide health insurance to all employees working 30 or more hours a week. The Republican proposal would do away with this, and even provide relief for employers who paid penalties in the past for not complying with this mandate.
• Employees will be able to contribute higher amounts to Health Savings Accounts (HSAs). Currently, a single employee can only contribute $3,400 to an HSA and an employee with a family can contribute $6,750. Under the Republican proposal, that will increase to $6,500 and $13,000, respectively.
• The cap on the amount of money that an employee could contribute to a flexible spending account (FSA) would be repealed, and employees would be free to contribute as much as they want. Additionally, money in an FSA could be used to purchase over-the-counter medications.
• The "Cadillac tax", which imposes huge taxes on high-cost health insurance plans, will not go into effect until 2025. As we have discussed, this tax, which was initially scheduled to go into effect last year, was delayed by two years because both Republicans and Democrats opposed it. Due to this opposition, I am skeptical that it will ever go into effect.
• Young adults can stay on their parents’ plan until they are 26.
• Employers will be permitted to deduct amounts paid for retiree prescription drug coverage as a business expense.
It is important to remember that the American Health Care Act is only a draft and will undergo further revisions in the Senate, and possibly from the White House, before it is passed. There is even a chance that it will not pass Congress, and the Affordable Care Act will remain in place. While the American Health Care Act makes its way through Congress, the Affordable Care Act will remain in place. It is anybody’s guess when the AHA will be passed, but it is unlikely that it will happen until at least the fall.
If it does pass Congress, the American Health Care Act, along with possible changes to the corporate tax system, will affect employers more than any other legislation in the near term. Therefore, you should stay tuned to our blog for updates.