1. Senate Bill Very Similar to House Bill
Like the American Health Care Act (AHCA) that the House passed in May, much of the BCRA is focused on reductions in federal Medicaid spending and on a repeal (or delay) of most taxes included in the ACA. Both bills eliminate the individual and employer “mandate” and make changes to the small group and individual health insurance markets. Like the AHCA, the BCRA leaves many other existing ACA insurance rules in place. While the House and Senate bills differ a bit in the fine details with respect to tax credits and Medicaid cuts, when it comes to the employer-related provisions, the BCRA is almost identical to the AHCA.Applicable Large-Employer “Penalties” Under §4980H Reduced to $0
Most importantly for larger employers, both the BCRA and the AHCA eliminate the penalty that applies to employers with 50 or more full-time equivalent employees for violating the ACA's employer shared responsibility (a/k/a employer pay-or-play) rules. The BCRA does not repeal those rules, but it reduces employer penalties to $0, which is as good as a full repeal for employers. If this legislation becomes law, employers will not need to worry about the look-back measurement period or any other ACA rules related to full-time employee eligibility requirements. Employers will be able to define group health plan eligibility in ways similar to ways they did prior to the ACA.Hope for Simpler Employer Reporting, But No Elimination :(
Neither the AHCA nor the BCRA directly addresses employer reporting requirements. However, both bills continue to make some sort of tax credits available to those who purchase individual health insurance. Eligibility for these tax credits will be dependent to some extent on whether the individual has employer-sponsored health insurance available, so the IRS will continue to need some kind of employer reporting. The hope is that the reporting could be much simpler in the future.Other Employer-Related Provisions of the BCRA
The BCRA repeals the medical loss ratio (MLR) rules It also includes a provision to encourage association health plans that would offer coverage to small employers.Both the AHCA and the BCRA include several other provisions of interest to employers:- Repeal of federal medical loss ratio (MLR) rules that require insurance companies to spend a specific percentage of premiums on claims, favoring instead state-created MLR rules.
- The limit on contributions to Health Flexible Spending Accounts (currently $2,600) would be repealed back to its pre-ACA level ($5,000).
- Over-the-counter medications would be treated as an eligible expense for purposes of HSAs and FSAs.
- HSA contribution limits would be raised to the current maximum out-of-pocket that applies to a high deductible health plan (currently $6,550 for self-only and $13,100 for family).
- The Cadillac tax remains, but is delayed until 2026.
- States will have flexibility to make additional changes to insurance rules, such as those regarding essential health benefit requirements.
- Both bills would repeal the Health Insurance Tax (HIT). This tax applies to health insurance companies, but is reflected in rates charged to employers.
2. Its Future Is Uncertain
Senate leadership wants to hold a vote on the BCRA before the Senate takes its Fourth of July break. However, the Congressional Budget Office (CBO) has not scored the bill yet, and the Senate will not vote until that has been done. Also, most of the negotiation took place behind closed doors, and various news sources are reporting that even some Republican Senators were not made aware of the bill text until it was released to the public. Because Senate leadership is attempting to pass the bill through its budget reconciliation process, it can only afford to lose two Republican votes, and the reception to the bill has been less than warm.If the Senate does pass the bill, the House and the Senate will need to work out the differences between the BCRA and the AHCA before it can become law. One key aspect of the process is that, under current congressional rules, the Senate bill must save the federal government about $130 billion dollars to move forward. The majority of the savings in the legislation comes from two areas: significant changes to Medicaid, and a reduction of the tax credits available to people purchasing individual health insurance policies. Like the AHCA, the Senate bill rolls back the ACA Medicaid expansion, but it also changes how Medicaid is funded by putting additional caps on future federal Medicaid spending. The CBO is expected to predict that the Medicaid changes in the Senate bill will reduce federal Medicaid spending by more than $750 billion over 10 years. Both the AHCA and the BCRA need the savings from the reductions in spending on Medicaid and health insurance subsidies to pay for the elimination of and reductions in ACA-related taxes contained in both bills.
The debate over Medicaid and subsidies for individual health insurance is not directly related to employer benefits issues, but it is important because the changes to employer plans contained in both bills is dependent on Congress’s coming to some agreement on these larger issues.