Updated Health Care Reform Legislation Comparison Chart

by Proskauer - Employee Benefits & Executive Compensation Blog
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The chart below compares key provisions of the Affordable Care Act (ACA), the American Health Care Act (AHCA) and the Better Care Reconciliation Act (BCRA). This chart is current as of July 13, 2017, and as of that date, neither the AHCA nor the BCRA have been enacted.

Health Care Reform Legislation Comparison

Shared Responsibility

ACA AHCA

BCRA

Employer Mandate Applicable large employers (those with 50 or more full-time employees and equivalents) face penalties if minimum essential coverage not offered to 95% of full-time employees (and dependents) or if coverage is not minimum value or affordable. No penalties for failing to provide adequate coverage. No penalties for failing to provide adequate coverage.
Individual Mandate Individuals subject to tax if not enrolled in minimum essential coverage unless exception applies. No tax for failing to enroll in minimum essential coverage. However, effective for plan years beginning in 2019, a 30% premium surcharge would be charged by insurance carriers to an individual who purchases insurance coverage following a lapse in coverage of 63 days or more. No tax for failing to enroll in minimum essential coverage. However, individuals who have a lapse in coverage of 63 or more days in the prior 12-month period will be subject to a 6-month coverage waiting period.
Reporting IRC §§ 6055 and 6056 require reporting from issuers of minimum essential coverage and applicable large employers. No change to ACA reporting requirements under IRC §§ 6055 and 6056. Additional Form W-2 reporting required. No change to ACA reporting requirements under IRC §§ 6055 and 6056.

Market Reforms

ACA AHCA

BCRA

Dependent Coverage If dependent children covered, coverage must continue until age 26. No change. No change.
Essential Health Benefits Small group and individual market plans must cover 10 essential health benefit categories, as defined by benchmark plan established by state. No change, but states can apply for waiver to establish separate definition of essential health benefit. No change, subject to relaxed waiver rights under ACA § 1332 (State Innovation Waivers).
Annual/Lifetime Dollar Limits No annual or lifetime dollar limits can be applied to essential health benefits. No change, but states can apply for waiver to establish separate definition of essential health benefit. No change, subject to relaxed waiver rights under ACA § 1332 (State Innovation Waivers).
Out-of-Pocket Maximums Out-of-pocket maximum applied to essential health benefits. No change, but states can apply for waiver to establish separate definition of essential health benefit. No change, subject to relaxed waiver rights under ACA § 1332 (State Innovation Waivers).
Preexisting Condition Exclusions Preexisting condition exclusions prohibited. No change, but insurance providers must apply a 30% premium surcharge if individual has a gap in coverage of 63 days or more. No change, but 6-month waiting period applied if individual has a gap in coverage of 63 days or more.
Preventive Care Preventive care covered without cost-sharing. No change. No change.
Emergency Coverage Emergency room visit at an out-of-network hospital must be covered at in-network rate. No change. No change.
Rescissions Coverage cannot be retroactively terminated except in cases of fraud or misrepresentation or for premium nonpayment. No change. No change.
Summaries of Benefits and Coverage Short (8-page) disclosure of plan terms and glossary distributed on an annual basis. No change. No change.
Enhanced Claims Procedures Claims procedures now require additional claims procedures and voluntary external review. No change. No change.
Provider Nondiscrimination Cannot discriminate against a health care provider acting pursuant to state license. No change. No change.
Section 105(h) Nondiscrimination Fully-insured employer-sponsored health plans cannot discriminate in favor of highly compensated individuals (not yet effective). No change. No change.
Medical Loss Ratio Individual and small group plans must spend 80% of premium income on claims and quality improvement. Large group insurance plans must spend 85% of premium income on claims and quality improvement. No change. Applicable ratio determined by the state (effective for plan years beginning on or after January 1, 2019).

Tax Reforms

ACA AHCA

BCRA

Cadillac Tax 40% excise tax applied to cost of group health coverage exceeding threshold (effective January 1, 2020). Delayed until January 1, 2025. Repealed effective December 31, 2019, but to be reinstated effective January 1, 2025,
Small Business Tax Credit Tax credit for premiums paid toward group health coverage available to small businesses. Not available for plans that cover abortion for plan years beginning on or after January 1, 2017; repealed for plan years beginning on or after January 1, 2020. Same as AHCA.
Health FSA Limit Maximum contribution to health FSA set at $2,500 (subject to annual increases for inflation). Repealed effective January 1, 2017. Repealed effective January 1, 2018.
HSA Distribution Penalty Penalty for HSA distributions used for non-qualifying medical expenses increased to 20%. Repealed effective January 1, 2017. Penalty would go back to 10% for HSAs and 15% for Archer MSAs. Same as AHCA.
HSA Contribution Limits No change. Increased to match statutory out-of-pocket maximum for high-deductible health plans (effective January 1, 2018). Same as AHCA.
FSA/HSA Reimbursements Health FSAs and HSAs cannot reimburse over-the-counter products without a prescription (excluding purchase of insulin). Health FSAs and HSAs can reimburse over-the-counter products without a prescription, effective January 1, 2017. Same as AHCA. Additionally, HSAs can be used to reimburse insurance premiums.
Medical Expense Deduction Itemized deduction under IRC § 223 available for medical expenses in excess of 10% of adjusted gross income. Repealed effective January 1, 2017. Threshold would return to 7.5% adjusted gross income. Same as AHCA.
Medicare Surcharge Additional 0.9% hospital insurance (Medicare) tax applied to high-earners. Repealed effective January 1, 2023. Same as ACA.
Medicare Investment Income Tax Medicare tax of 3.8% applied to unearned income. Repealed effective January 1, 2017. Same as ACA.
Health Insurance Tax Tax applied to insurance carriers based on premiums collected. Repealed effective January 1, 2017. Repealed effective January 1, 2018.
Health Insurer Compensation Deduction No compensation deduction available to certain health insurance providers for compensation in excess of $500,000 paid to applicable individuals. Repealed effective January 1, 2017. Same as ACA.
Medical Device Tax Excise tax of 2.3% imposed on manufacturer, producers and importers of medical devices. Repealed effective January 1, 2017. Repealed effective January 1, 2018.
Branded Prescription Drug Fee Manufacturers and importers of branded prescription drugs are subject to an annual fee. Repealed effective January 1, 2017. Repealed effective January 1, 2018.
Retiree Drug Subsidy Amount received under Retiree Drug Subsidy must be taken into consideration when determining prescription drug cost business deduction. Repealed effective January 1, 2017. Same as AHCA.

Marketplace

ACA AHCA

BCRA

Marketplace Structure Individuals can purchase insurance coverage on risk-pooled Marketplace established by Federal or state government.   Individuals purchasing coverage on the Marketplace may be eligible for cost-sharing subsidies and premium assistance.  Plans available on Marketplace (“qualified health plans”) must meet certain cost-sharing and actuarial value levels (i.e., gold, silver, bronze plans).  Qualified health plans must cover essential health benefits. Effective January 1, 2020, cost-sharing subsidies and premium assistance are repealed. Additionally, Marketplace plans are no longer required to meet cost-sharing and actuarial value requirements.  Limited-scope, or catastrophic plans would be available. Marketplaces, including cost-sharing subsidies and premium assistance, remain intact with modifications.

 

Off-Marketplace insurance plans that are not ACA-compliance are permitted with certification that rating area contains gold, silver and premium ACA Marketplace plans. Off-Marketplace coverage would not be considered creditable coverage for purposes of determining whether 6-month delay applies.

Cost-Sharing Subsidies and Premium Assistance Available to individuals with household income between 100% and 400% of federal poverty line. Age is not a factor in amount of subsidies or assistance available. For plan years beginning in 2018 and 2019, basic structure remains the same except that age and income are factors in the amount of cost-sharing subsidies and premium assistance that is available.  No subsidies or assistance is available for qualified health plans that cover abortion.

 

Cost-sharing subsidies and premium assistance repealed for plan years beginning in 2020. Instead, advance tax credit available based solely on age.

Available to individuals with household income between 100% and 350% of federal poverty line. Age is a factor in amount of subsidies or assistance available.
Premium Rate Setting Small group and individual insurance markets may vary rates based only on certain factors, including individual or family coverage, community rating, age (3:1 ratio) and tobacco use. Age ratio increases to 5:1 beginning January 1, 2018. States may apply to waive ACA requirements and base premiums on health factors. Age ratio increases to 5:1 beginning January 1, 2018. State Innovation Waiver Program (ACA § 1332) requirements relaxed, giving states ability to waive many of the ACA’s market reforms.

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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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