Overview
On June 22nd, Republicans in the Senate released their plan to repeal and replace the ACA. This proposal is called the Better Care Reconciliation ACT (BCRA). The BCRA, as it currently stands, keeps several provisions of the ACA. The BCRA is the response to the House’s bill, the AHCA, which we wrote about here. Ultimately, the BCRA is a budget reconciliation bill, and so it cannot repeal the ACA in full. What it can do, is to make changes to the ACA’s tax credits and federal spending dedicated to the ACA. As with the AHCA, the Senate has not voted on the bill yet, and so there is still time to make changes. However, based on what the Senate has released, here’s what we know so far.
What’s New?
First, the BCRA seeks to remove the employer and individual mandates. Like the AHCA, the BCRA cannot repeal these mandates. However, it does reduce the penalty imposed for violating the mandates to zero. This means that, even though the mandates remain, there is no penalty for disregarding them.
The BCRA would also eliminate a provision in the AHCA to allow insurance carriers to add a 30% late enrollment charge for those seeking to enroll outside of enrollment periods. Further, the BCRA seeks to replace the ACA’s insurance subsidies with tax-credits. These tax credits are designed as an incentive to enroll in coverage by helping to partially fund the purchase of insurance.
State waivers are another important aspect of the the new bill. In response to the House’s AHCA, which allowed States to apply to waive essential health benefits (provisions that all plans must include), the BCRA eliminates that option. Instead, the new bill expands Section 1332 of the ACA. This section allows States to change what they consider essential health benefits. These changes must meet the basic protections of the ACA. The BCRA lowers the standards for reasons that a state can apply for a waiver. This means that states can fundamentally change what is considered an essential health benefits in their state.
Finally, there are also important changes to HSA’s in the bill. Currently, the IRS sets a yearly limit on how much a participant can contribute to an HSA. Under the BCRA, the contribution limit, starting in 2018, would be the maximum out-of-pocket the law allows. In this case, that would be $6,550 for those with an individual plan, and $13,100 for those with family coverage.
What Stays the Same?
Under the BCRA, many provisions of the ACA would remain intact. Importantly, individuals under the age of 26 will continue to have the option of coverage under their parents’ plan. Further, the ACA’s requirement that pre-existing conditions be covered will still be in place. The prohibition of lifetime and yearly annual limits for essential health benefits has also stayed. Finally, the clauses requiring guaranteed availability and renewability, along with non-discrimination rules and the prohibition against health status underwriting remain in place.
As we talked about earlier, the individual and employer mandates are also still in place, although due to the lack of penalty for violating these provisions, the BCRA renders them effectively void.
Conclusion
The BCRA is the next step in the Republicans’ attempt to fulfill their promise to repeal and replace the ACA. Because the Senate has not voted on the BCRA, it is not law. Once they vote, there are still more steps. First, the Senate will have to send the bill to the House, which could make further changes. Then, it would come back to the Senate for a final vote. Finally, the President would sign it into law.
For the time being, the ACA is still the law. We’ll be watching to see what changes are made, if any, and keep you up to date as the bill moves along. As always, if you have questions about the BCRA, the AHCA, or the ACA, please reach out to us. You can reach us via email at info@morganplan.com, or by phone at 800-484-2199.