House Republicans Release Legislation to Repeal and Replace the ACA

On March 6, 2017, the House Ways and Means Committee and the House Energy and Commerce Committee each released budget reconciliation bills. These pieces of legislation are part of the House Republican’s American Health Care Act (AHCA), the legislation designed to repeal and replace the Affordable Care Act (ACA).

Though both bills must pass through the legislative process before becoming law, it is important to understand the potential changes to come if the legislation becomes effective. This article outlines the major changes proposed in the legislation.

Changes to the ACA

The AHCA proposes to repeal both the individual and employer mandate penalties. It would also eliminate ACA-imposed taxes on over-the-counter medications, medical devices, prescription drugs and health insurance premiums.

Changes to Tax Credits

The AHCA would repeal the ACA premium tax credits beginning in 2020 and replace them with a new age-adjusted, fixed-dollar refundable tax credit. The tax credit would be adjusted for inflation and be available only to people who are not eligible for employer- or government-sponsored health insurance. The AHCA would also repeal the ACA small business tax credit beginning in 2020.

Changes to Health Spending Accounts

The AHCA would lower taxes on health savings account (HSA) distributions on nonqualified medical expenses to pre-ACA rates effective after Dec. 31, 2017, and allow both spouses to make catch-up contributions to one HSA beginning in 2018. The legislation would also repeal the contribution limits on flexible spending accounts (FSAs), effective for taxable years beginning after Dec. 31, 2017.

Changes to Health Insurance Markets

The AHCA would repeal the cost-sharing subsidy program. It would also establish a continuous health insurance coverage incentive and the Patient and State Stability Fund, which is designed to lower patient costs and stabilize state markets.

Other Changes

This article highlights a few key changes contained in the committee bill. You can view both bills by following the links provided above for further information. Visit the Ways and Means Committee and the Energy and Commerce Committee websites for more information.

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