American Health Care Act Summary
The American Health Care Act (AHCA) was the legislation for healthcare reform that the House of Representatives considered, but opted not to bring to a vote on March 24th. We don’t know what will happen next. Many clients wanted a better understanding of the specific changes that were proposed. While it appears that the AHCA will not move forward in its present form, this summary provides insight into the provisions that could be included in new healthcare reform legislation. Key points of the American Health Care Act:
- Mandates, penalties and taxes imposed by the original Affordable Care Act (ACA) are removed with some being retroactively applied to 2016. This includes both the Individual Mandate and the Employer Mandate. An individual that does not have qualifying health insurance in 2017 would not be subject to a penalty. In future years the penalty is replaced with a Late Enrollment Penalty
- Premium Tax Credits are modified to increase the amount for younger people and reduce the amount for those who are 50 and older.
- HSA contributions will be increased to match the maximum out-of-pocket (OOP) expense on your policy. In 2017, the maximum OOP is $14,300 for a family, but the maximum contribution to an HSA is limited to $6,750.
- Impose a Late Enrollment Penalty that applies to anyone that is enrolling in individual health insurance that has not maintained continuous coverage for the preceding 12 months with no more than a 63 day gap in coverage. The penalty will begin in 2018 with those applying for coverage during a Special Enrollment Period and will expand in 2019 to include Open Enrollments. The penalty will apply for the current plan year and will be equal to 30% of the premium.
- Repeal the Cost Share Reduction benefit
- Replace the income based Premium Tax Credit with a Flat Tax Credit that is based on age:
- Through 29 – $2000 tax credit per person per year;
- Through 39 – $2500 tax credit per person per year;
- Through 49 – $3000 tax credit per person per year;
- Through 50 – $3500 tax credit per person per year;
- 60 and older – $4000 tax credit per person per year.
- The tax credit will be phased out based on income levels. The phase out will begin at income levels of $75,000 single / $150,000 family and be reduced to $0 for income levels above $115,000 single / $230,000 family.
There were no changes proposed for the following:
- Policies will be “Guarantee Issue.” There will be no discrimination in premium or benefits for a pre-existing health condition.
- Premiums will continue to be based on age, location (home address) and tobacco use. Dependent children can be covered to age 26.
- Preventive care will be covered with no charge to the policyholder
- Benefits will be provided for the 10 Essential Health Benefits that were established in the ACA. This includes maternity and mental health services.
- Open Enrollment and Special Enrollment Period guidelines will continue.
- Federal funds will be available to the states to provide financial help to cover medical expenses of high risk individuals.
- The exchanges will continue. Tax credits used through an exchange may be applied to monthly premiums. Tax credits may also be used “off exchange”, but can only be applied with your tax return.
- There is no provision for the sale of health insurance across state lines.
ComPro (ComProIns.com) will continue to provide updates as other healthcare reform legislation is considered.
Make an educated decision, visit ComProIns.com today.
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