ACA Brief: Path to Repeal—The American Health Care Act Unveiled

by Eversheds Sutherland (US) LLP

Eversheds Sutherland (US) LLP

This ACA Brief is the fourth in a series of installments that will closely track congressional and administrative actions relating to ACA provisions that affect large employer-sponsored plans.

On March 6, 2017, the U.S. House of Representatives Ways and Means Committee and the Energy and Commerce Committee jointly introduced the Republicans’ long-awaited budget reconciliation bill that will be used to repeal and replace certain provisions of the Patient Protection and Affordable Care Act (ACA). Collectively titled the American Health Care Act (AHCA), the legislation reflects each respective committee’s response to the instructions to roll back key provisions of the ACA as contained in the Concurrent Resolution on the Budget for Fiscal Year 2017, as passed in mid-January (for more information, see our January 17 ACA Brief). On March 13, the Congressional Budget Office (CBO) issued its cost estimate of the legislation. As detailed in our January 31 ACA Brief, the reconciliation legislation was expected to contain several provisions that would affect large employer-sponsored health plans. This ACA Brief follows our January 31 predictions and examines other key provisions in the AHCA that will be of interest to health plan sponsors.

What other provisions could impact large employer-sponsored plans?

In addition to the above provisions, the AHCA also: 

  • Provides for federal matching grants to states to promote access to certain medical services, provider payments or cost-reduction measures for individuals enrolled in health insurance coverage in each state.
  • Imposes a surcharge on individuals reentering the market after a period without coverage. Individuals who are covered under individual or small group health insurance policies will be charged a 30 percent premium surcharge following a break in coverage of more than 63 days during the 12-month period preceding coverage. The premium penalty does not apply to individuals in the group market – including, presumably, those covered under COBRA. As written, the provision may encourage more former employees to elect COBRA coverage rather than exchange coverage in order to avoid the potential penalty. 
  • Would allow insurance companies to vary the premium rate for coverage in the individual and small group market based on age by up to 5:1 (or higher, if permitted by the state), which may result in higher premiums for pre-Medicare retirees who seek coverage on the individual market using HRA contributions. 
  • Provides for a new refundable tax credit for coverage purchased on the individual market of up to $4,000 per year, adjusted for age and income. The credit is available only to U.S. citizens or nationals (or qualified aliens) who are not incarcerated, are covered by either individual health insurance or certain unsubsidized COBRA coverage and are not eligible for employer-sponsored coverage (as certified by the employer). 
  • Allows both spouses to make catch-up contributions to the same HSA account, allows expenses incurred up to 60 days prior to the establishment of an HSA to be treated as eligible HSA expenses, and increases the maximum amounts that can be contributed to HSAs to the amount of the out-of-pocket limit, effective December 31, 2017.

What is not in the bill? 

The AHCA does not repeal or amend certain provisions that are key to employer-sponsored health plans, including: 

  • Mandatory pre-existing condition coverage,
  • Mandatory coverage for children up to age 26,
  • Prohibitions on annual and lifetime limits, 
  • Caps on out-of-pocket spending, 
  • Prohibitions on rescissions, 
  • Prohibitions on waiting periods longer than 90 days,
  • Mandatory first-dollar preventive care coverage, 
  • Prohibitions on discrimination in health plans, 
  • Essential health benefit requirements, or 
  • Internal Revenue Code sections 6055/6056 reporting. 

Republican leadership has now signaled that it will take a “three-pronged” approach to repealing and replacing the remaining portions of the ACA. However, as noted in the first installment of our ACA Briefs, the process, timing and ultimate question of whether the non-budget-oriented provisions may be repealed at all are still unclear. 

What does this mean for large employer-sponsored plans?

The AHCA cleared the respective committees on March 9, but has been met with several political challenges. The March 31 CBO report estimated that while enacting the legislation would result in a $337 billion reduction in the federal deficit over 10 years, it would also result in a corresponding increase in the number of uninsured Americans by 24 million. The estimated number of uninsured Americans has increased the likelihood that this draft will see considerable revisions in the form of a manager’s amendment, most likely affecting the roll-back of the Medicaid expansion and tax credit reduction provisions. The legislation will likely move to the House Budget Committee, and eventually to the full U.S. House of Representatives for a floor vote. In order for the legislation to reach the President’s desk, it must survive any procedural challenges by Senate Democrats, and earn a unanimous vote by a united Republican caucus. To date, however, serious fractures in the Republican caucus still place the future of the AHCA in question, with certain key stakeholders signaling that additional changes may be necessary in order for the legislation to gain undivided support from Senate Republicans.

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.

© Eversheds Sutherland (US) LLP | Attorney Advertising

Written by:

Eversheds Sutherland (US) LLP

Eversheds Sutherland (US) LLP on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
Sign up using*

Already signed up? Log in here

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
Privacy Policy (Updated: October 8, 2015):

JD Supra provides users with access to its legal industry publishing services (the "Service") through its website (the "Website") as well as through other sources. Our policies with regard to data collection and use of personal information of users of the Service, regardless of the manner in which users access the Service, and visitors to the Website are set forth in this statement ("Policy"). By using the Service, you signify your acceptance of this Policy.

Information Collection and Use by JD Supra

JD Supra collects users' names, companies, titles, e-mail address and industry. JD Supra also tracks the pages that users visit, logs IP addresses and aggregates non-personally identifiable user data and browser type. This data is gathered using cookies and other technologies.

The information and data collected is used to authenticate users and to send notifications relating to the Service, including email alerts to which users have subscribed; to manage the Service and Website, to improve the Service and to customize the user's experience. This information is also provided to the authors of the content to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

JD Supra does not sell, rent or otherwise provide your details to third parties, other than to the authors of the content on JD Supra.

If you prefer not to enable cookies, you may change your browser settings to disable cookies; however, please note that rejecting cookies while visiting the Website may result in certain parts of the Website not operating correctly or as efficiently as if cookies were allowed.

Email Choice/Opt-out

Users who opt in to receive emails may choose to no longer receive e-mail updates and newsletters by selecting the "opt-out of future email" option in the email they receive from JD Supra or in their JD Supra account management screen.


JD Supra takes reasonable precautions to insure that user information is kept private. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. However, please note that no method of transmitting or storing data is completely secure and we cannot guarantee the security of user information. Unauthorized entry or use, hardware or software failure, and other factors may compromise the security of user information at any time.

If you have reason to believe that your interaction with us is no longer secure, you must immediately notify us of the problem by contacting us at In the unlikely event that we believe that the security of your user information in our possession or control may have been compromised, we may seek to notify you of that development and, if so, will endeavor to do so as promptly as practicable under the circumstances.

Sharing and Disclosure of Information JD Supra Collects

Except as otherwise described in this privacy statement, JD Supra will not disclose personal information to any third party unless we believe that disclosure is necessary to: (1) comply with applicable laws; (2) respond to governmental inquiries or requests; (3) comply with valid legal process; (4) protect the rights, privacy, safety or property of JD Supra, users of the Service, Website visitors or the public; (5) permit us to pursue available remedies or limit the damages that we may sustain; and (6) enforce our Terms & Conditions of Use.

In the event there is a change in the corporate structure of JD Supra such as, but not limited to, merger, consolidation, sale, liquidation or transfer of substantial assets, JD Supra may, in its sole discretion, transfer, sell or assign information collected on and through the Service to one or more affiliated or unaffiliated third parties.

Links to Other Websites

This Website and the Service may contain links to other websites. The operator of such other websites may collect information about you, including through cookies or other technologies. If you are using the Service through the Website and link to another site, you will leave the Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We shall have no responsibility or liability for your visitation to, and the data collection and use practices of, such other sites. This Policy applies solely to the information collected in connection with your use of this Website and does not apply to any practices conducted offline or in connection with any other websites.

Changes in Our Privacy Policy

We reserve the right to change this Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our privacy policy will become effective upon posting of the revised policy on the Website. By continuing to use the Service or Website following such changes, you will be deemed to have agreed to such changes. If you do not agree with the terms of this Policy, as it may be amended from time to time, in whole or part, please do not continue using the Service or the Website.

Contacting JD Supra

If you have any questions about this privacy statement, the practices of this site, your dealings with this Web site, or if you would like to change any of the information you have provided to us, please contact us at:

- hide
*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.