Federal Affordable Care Act Replacement Plan Unveiled

The proposal could result in dramatically different provisions governing health care plans for employers.
(Published Mar 13, 2017)

(Updated May 4, 2017)

The framework associated with the provisions of the American Health Care Act (AHCA), seeking to modify, repeal, and/or replace provisions of the Affordable Care Act (ACA), was released on March 6 and passed by the House on May 4. While the passage of the bill is not assured, its introduction is an important step in the process that could result in dramatically different provisions governing health care plans for employers.

Some highlights of the AHCA that are important to employers include:

  • Elimination of the employer mandate by reducing the penalty to zero for applicable larger employers that fail to offer minimum essential coverage to their full-time employees.
  • Delay of the effective date of the 40 percent excise tax (the Cadillac plan tax) from 2020 to 2025.
  • Increasing the basic limit or annual aggregate health savings account (HSA) contributions ($6,550 for employee only and $13,100 for family coverage) beginning in 2018.
  • Repeal of the limitation on health flexible spending account (FSA) contributions ($2,500 indexed for cost-of-living adjustments) for taxable years starting on Jan. 1, 2018.
  • Repeal of the exclusion of over-the-counter medications under HSA and health FSAs and HRAs.
  • Loosening the age rating band ratio from 3:1 to 5:1.
  • Repeal of the annual fee on health insurers beginning in 2018.
  • Investing $100 billion over 10 years into a Patient and State Stability Fund that states can use to build high-risk pools for individuals with costly medical conditions, increase the amount of the tax credits in the individual market, or subsidize insurers that cover especially costly individuals.

Provisions of ACA that the AHCA will NOT impact:

  • Prohibition of pre-existing condition exclusions.
  • Coverage for children until the age of 26.
  • Prohibition on lifetime or annual limits.

Get a more detailed summary of the AHCA from the Arthur J. Gallagher & Co. website (pdf)

This article is based on information provided by Arthur J Gallagher & Co., in partnership with the League of Minnesota Cities.

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