American Health Care Act Pulled From House Floor: No New Legislation to Repeal and Replace ACA

by Perkins Coie
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The much-anticipated vote by the U.S. House of Representatives on the “American Health Care Act,” also known as “AHCA” or the “Obamacare replacement bill,” was cancelled last week, leaving many to ask “what now?” As noted in our previous update, until new legislation is signed by the president, we recommend staying the course with your current ACA compliance strategy. In other words, the ACA has not been modified or repealed, and all compliance requirements remain intact.

ACA Compliance Continues

This means, for example, that “Applicable Large Employers” who file electronically must file Forms 1094-C and Forms 1095-C with the IRS by March 31, 2017, unless they have filed Form 8809, Application for Extension of Time to File Information Returns, for an automatic 30-day extension of the filing deadline. (An Applicable Large Employer for a calendar year is an employer who employed and average of at least 50 “full-time,” or “full-time equivalent” employees on business days during the preceding calendar year.)

Other examples include: the ACA’s contribution limits for health flexible spending accounts ($2,600 as adjusted for inflation for 2017) and health saving accounts (the lower limit on the annual deductible for 2017 is $1,300 for self-only coverage and $2,600 for family coverage and the upper limit for out-of-pocket expenses is $6,550 for self-only coverage and $13,100 for family coverage); the 40% excise tax on high-cost employer-sponsored health coverage, known as the “Cadillac Tax,” which is still postponed until 2020; and Medicaid expansion, which is not repealed in 2020 for adults with income above 133% of the federal poverty line.

Changes May Be Forthcoming

Even though the vote on the AHCA was withdrawn, it does not mean the ACA and its implementing regulations and guidance will not change. On January 20, 2017, the president issued an Executive Order, “Minimizing the Economic Burden of the Patient Protection and Affordable Care Act Pending Repeal” (“Order”). The Order directs the heads of all executive departments and agencies to exercise their authority to “waive, defer, grant exemptions from, or delay the implementation of any provision or requirement of the [ACA] that would impose a fiscal burden on any State or a cost, fee, tax, penalty, or regulatory burden on individuals, families, healthcare providers, health insurance issuers, patients, recipients of healthcare services, purchasers of insurance, or makers of medical devices, products or medications.” Following this Order, the IRS confirmed to various news agencies that it would continue to allow taxpayers to file their returns without indicating whether they complied with the individual mandate. Does this mean that those failing to comply with the mandate would not be assessed penalties? Would the same be true for Applicable Large Employers who do not file their information returns? Many other questions remain. The impact of the Order is and remains unknown until such time as the agencies, which administer ACA programs or enforce ACA requirements, take action or don’t take action. 

Further, on March 20, 2017, the Health and Human Services Department (HHS) announced a new webpage that will be home to updates on its activity. In announcing the new webpage, Secretary Tom Price stated that HHS is “taking action to improve choices for patients, stabilize the individual and small-group insurance markets, and expand access to more affordable coverage,” all part of the Republicans three-pronged plan to repeal and replace the ACA. It is unclear whether administrative action, as contemplated by the new HHS webpage and the second prong of the health care reform plan (the first prong was the AHCA), will commence as contemplated. The competing messages of the Order of “no action,” and the new HHS webpage contemplating “action,” align with current competing messages of dismantling as much of the ACA as possible through a regulatory process, or doing nothing, which will, allegedly, cause the ACA’s quick demise. Under either scenario, health plans will be impacted and compliance changes will likely be necessary.   

Finally, there are at least three new pieces of legislation that have been introduced that could impact health plans, including HR 1313, the “Preserving Employee Wellness Programs Act,” which would preempt regulation of wellness programs under the Americans with Disabilities Act or Genetic Information Nondiscrimination Act; HR 1101, the “Small Business Health Fairness Act of 2017,” which would amend ERISA to provide for the establishment of association health plans that are sponsored by business associations; and HR 372, the “Competitive Health Insurance Reform Act,” which would permit the sale of health insurance across state lines.

No matter what happens next, whether it be proposed legislation, agency guidance or action, we will keep you informed. Stay tuned and watch for future health plan compliance updates.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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