The AHCA

On May 4th, the House of Representatives passed legislation to repeal and replace the Affordable Care Act (ACA). This legislation is known as the American Health Care Act (AHCA). The AHCA seeks to repeal certain provisions of the ACA in an effort to lower premiums and expand plan choice. Because the Senate has not voted on the bill, and the President has not signed it, the ACA remains the law. It is also clear that the AHCA will undergo revision in the Senate and, if passed, will change from its current form and provisions. There’s still a lot of uncertainty about where things are going, but here’s a quick look at what we know so far.

What is it?

In its current form, the AHCA has several provisions that amend, replace, or undo key points of the ACA. First, the bill repeals the individual and employer mandates penalties instituted by the ACA. The mandate requires individuals and employers with more than 50 full time equivalent employees to obtain or offer coverage.  Thus, individuals and employers who do not have or offer health insurance are no longer subject to fines. Insurers will be able to charge a higher premium for those who have gone more than 2 months without coverage. Insurers can charge this higher premium for 12 months. It seeks to prevent individuals from allowing their coverage to lapse.

Second, the bill allows individual states to waive the essential health coverage established by the ACA. States will now have the ability to define what constitutes essential health benefits (EHBs), to allow insurers to charge higher premiums based on health status, and to increase age band ratios. Further, if states waive these provisions, they can establish a state high risk pool. These high risk pools are designed to keep premiums low by removing the sick from the general risk pool. Federal funding exists to assist individuals in the high risk pools.

Finally, AHCA also repeals many of the taxes and fees associated with the ACA. We’ve already looked at some of these fees in a previous post, but we should note that the Cadillac Tax remains in effect, although it will not be instituted until 2026. The bill also replaces income subsidies with age banded tax credits in an effort to lower premiums. Further, the bill ends the Medicaid expansion created by the ACA.

What it isn’t

The AHCA keeps certain provisions of the ACA intact. First, coverage must have guaranteed availability and renewability. Second, it lets people under the age of 26 stay on their parents’ plan. Third, it keeps the prohibition on annual and lifetime limits for EHBs. Fourth, it maintains the requirement that coverage may not be denied due to a preexisting condition (although states can apply to waive this provision).

Conclusion

Although any of these provisions may change  as the bill is debated in the Senate, this is where it stands now. We’re going to keep watching this bill and the debate around it. We’ll keep you informed of any changes that happen, and how those changes might impact you. If you have questions, we’re always here and ready to walk you through what’s going on and to answer to the best of our knowledge and ability. Please don’t hesitate to reach out to us by email at info@morganplan.com, or by phone at 800-484-2199.