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June 23, 2017

HRB 130 - Senate Releases Health Care Reform Proposal (article)

HRB 130 - Senate Releases Health Care Reform Proposal

Released June 23, 2017 I Download as a PDF

The Senate has now made public its health care reform bill, named the “Better Care Reconciliation Act of 2017”.  In many ways, it tracks the House bill passed on May 4, 2017 (see the CBIZ Health Reform Bulletin 128House Passes the American Health Care Act, 5/5/2017). 


In effect, both House and Senate bills would repeal most of the Affordable Care Act (ACA) taxes, with the exception of the so-called Cadillac tax, an excise tax imposed on high cost health coverage.  According to both bills, the imposition of the Cadillac tax would be delayed until 2026.


Like the House bill, the Senate bill does not outright repeal the individual mandate nor does it repeal the employer shared responsibility requirement but reduces the applicable tax penalties to zero.


One of the most significant aspects of both bills relates to the impact on individuals who do not have access to employer-provided health coverage.  As a reminder, the ACA provided for expansion of Medicaid.  Certain states did, in fact, expand Medicaid to individuals earning below 138% of poverty.  The Senate bill would allow the so-called expansion states to continue to receive federal money for their Medicaid expansion for a few more years than the House bill, phasing it out between 2020 and 2024.  In a more global way, the Senate bill would allow states to either take a block grant or per capita allotment to provide care for the Medicaid population.  There is concern that both the House and Senate bills would significantly reduce coverage for, and funding for those below certain income thresholds and those in poverty.  While this does not directly impact employers, it arguably does impact overall health care costs in that if fewer people are covered, there would be more cost shifting to the paying population.  This is bound to create significant discussion as efforts are made to merge the House and Senate bills.


Another major difference between the House and Senate bills relates to the premium tax credits, currently made available under the ACA for individuals earning below 400% of poverty.  The Senate bill would continue these tax credits but would restrict the group eligible for them.  The House bill would provide a refundable tax credit, based on earnings, as discussed in HRB 128.


At this point, the Senate is waiting for the Congressional Budget Office to score its bill which is expected to be released next week.  The bill would then be considered on the floor of Congress.  Several Senators have already indicated uncertainty about the bill.   


The process is sure to evolve and we will keep you updated as matters progress.  In the interim, remember the Affordable Care Act has not been repealed, and remains in full force and effect.


About the Author: Karen R. McLeese is Vice President of Employee Benefit Regulatory Affairs for CBIZ Benefits & Insurance Services, Inc., a division of CBIZ, Inc. She serves as in-house counsel, with particular emphasis on monitoring and interpreting state and federal employee benefits law. Ms. McLeese is based in the CBIZ Kansas City office.


The information contained herein is not intended to be legal, accounting, or other professional advice, nor are these comments directed to specific situations. The information contained herein is provided as general guidance and may be affected by changes in law or regulation. The information contained herein is not intended to replace or substitute for accounting or other professional advice. Attorneys or tax advisors must be consulted for assistance in specific situations. This information is provided as-is, with no warranties of any kind. CBIZ shall not be liable for any damages whatsoever in connection with its use and assumes no obligation to inform the reader of any changes in laws or other factors that could affect the information contained herein.

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