The American Health Care Act (AHCA), the bill representing the combined efforts of various interests to “repeal and replace” HCR, was scheduled for a House floor vote last Friday, March 24, 2017. As part of the budget reconciliation process, passage of the bill would have only taken 51 votes, instead of a 60 vote majority, meaning that the bill could have passed without any support from Democrats. In a last minute decision, House Speaker Paul Ryan pulled the bill in its entirety due to the increasing probability the bill would not pass because there was not unified Republican support. So what does that mean? And, where do we go from here?
By reducing penalties under the Individual Mandate and the Employer Mandate to zero (retroactive to December 31, 2015), removing limitations on Health FSAs, increasing HSA contribution limits, and delaying the Cadillac Tax until 2025, the AHCA would have significantly eased the negative impact of HCR. Without those changes, HCR requirements and penalties remain fully applicable. HCR continues to limit the effective use of Health FSAs and HSAs; and the Cadillac Tax applies beginning 2020.
Likely, the most significant impact of AHCA’s failure to move forward is on applicable large employers (ALEs). Determination of ALE status needs to be determined prior to the start of each calendar year. Counting on HCR repeal, numerous employers did not make this determination prior to 2017. Others have not yet filed for the 2016 calendar year. [The filing deadline for 2016 is March 31, 2017 – this week!] In addition, efforts to establish look back periods, track employee status, obtain dependent Social Security Numbers, etc. have largely been on hold.
Instead of gearing up for the changes expected from AHCA, employers need to evaluate what is necessary to catch up, and continue, compliance with HCR. As House Speaker Ryan said on Friday, “I don’t know what else to say other than Obamacare is the law of the land. It’ll remain law of the land until it’s replaced,” he said. “We’re going to be living with Obamacare for the foreseeable future.” The GOP intends to shift its focus and efforts to tax reform.
We are continuing to assist our clients with HCR compliance. Please contact us for any questions or if you are in need of assistance.