And Now We Have the BCRA of 2017

On Thursday, the Senate released the Better Care Reconciliation Act of 2017 (BRCA), its version of a bill making significant changes to the Affordable Care Act (ACA). The Senate bill is very similar to the American Health Care Act (AHCA), passed by the House in May. Like the AHCA, the majority of the BRCA is focused on reductions in Medicaid spending and a repeal (or delay) of most taxes included in the ACA. Both bills leave many of the ACA insurance rules in place.

As with earlier posts, we are going to focus here on the specific elements of the Senate bill that most directly affect employers and the benefits offered to employees. When it comes to the employer-related provisions, the BRCA is almost identical to the AHCA.

Applicable Large-Employer “Penalties” Under §4980H Reduced to $0
Most importantly for employers, both the BRCA and the AHCA eliminate the penalty for violating the §4980H employer shared responsibility requirements. The rules are not repealed, but the employer penalty is reduced to $0. This is as good as a full repeal for employers. Employers will not need to worry about the “look-back measurement period” or any other ACA rules related to full-time employee eligibility requirements. If this bill becomes law, we expect that many employers will revert to defining health plan eligibility in ways they did prior to the ACA

Employer Reporting
Neither the AHCA nor the BRCA directly addresses employer reporting requirements. However, both bills continue to make some sort of tax credits available to those who purchase individual health insurance. Eligibility for these tax credits will be dependent to some extent on whether the individual has employer-sponsored health insurance available, so the IRS will continue to need some kind of employer reporting. The hope is that the reporting will be much simpler in the future than it is currently.

Other Employer-Related Provisions
Both the AHCA and the BRCA include several other interesting employer-related provisions:

  • The Cadillac tax is delayed until 2026.
  • States will have flexibility to make additional changes to insurance rules, such as those regarding essential health benefit requirements.
  • The limit on contributions to Health Flexible Spending Accounts (currently $2,600) would be repealed.
  • Both bills would repeal the Health Insurance Tax (HIT). This tax applies to health insurance companies, but is reflected in rates charged to employers.
  • Over-the-counter medications would be treated as an eligible expense in HSA and HFSA.
  • The penalty for HSA withdrawals used for ineligible expenses would be reduced from 20% to 10%.
  • HSA contribution limits would be raised to the current maximum out-of-pocket that applies to a High Deductible Health Plan (currently $6,550 for self-only and $13,100 for family), and catch-up contributions for both spouses may be made into the same HSA.

Will It Pass?
There is still a long way to go before this legislation becomes law. Will the Senate be able to pass this version of the bill? Will the Senate parliamentarian decide that some aspects of the bill do not meet the budget reconciliation requirements? Will the Senate and the House be able to reconcile differences between the two bills?

Importantly, under the budget reconciliation rules being used, Congress must pass current health legislation under consideration by the end of September. Since Congress will be on break most of August, the bill must be moved forward quickly.

Please contact your Verus account management team or info@verusinsurance.com for more information.

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