CBO Releases Updated Score of AHCA – 51 Million to Be Uninsured, Government Savings of $119 Billion

CBO Releases Updated Score of AHCA – 51 Million to Be Uninsured, Government Savings of $119 Billion

National Association of Health Underwriters Washington Update

May 26, 2017

 

The Congressional Budget Office (CBO) released their highly anticipated updated report on the American Health Care Act (AHCA) on Wednesday, showing that the bill would save the government $119 billion and that an additional 23 million would be uninsured to bring a total of 51 million Americans without insurance. This amounts to a net increase of 3 million additional uninsured from before the ACA was signed into law, when 48 million didn’t have coverage. The previous score released in March projected that the bill would save the government $150 billion (revised down from an initial savings of $337 billion) and would lead to 24 million newly uninsured. The CBO is the nonpartisan group tasked with determining the cost of legislation to the federal government, both in a loss of revenue and increase in spending.
The updated report was necessitated by the adoption of several amendments to the AHCA from the last time the bill had been scored. The most prominent of these was the amendment offered by Representative Tom MacArthur (R-NJ) to allow states to receive a waiver to opt out of the ACA’s essential health benefits and age and community rating provisions. These waivers would be contingent on reducing average premiums, increasing enrollment, stabilizing the market, stabilizing premiums for individuals with pre-existing conditions, or increasing the choice of health plans. In turn, states could propose one of the following:  
  1. Increase the state’s age-rating bands. The state must specify a higher age-rating band, generally defaulted at 5:1 under other sections of the AHCA, although states could opt for higher ratios.
  2. Establish state-based requirements for essential health benefits (EHBs) in the individual and small group markets beginning in 2020. The state must precisely specify both the benefit categories and the specific benefits within the categories. This could include overriding the ACA’s prohibitions of lifetime and annual limits and cap on out-of-pocket expenditures, which could also be applied to large group and self-insured employer plans.
  3. Permit insurers to price policies based on health status. This substitutes the AHCA’s original continuous coverage incentive’s late-enrollment penalty to allow insurers to charge higher premiums for consumers who do not maintain continuous coverage (defined as a lapse of 63 days+ over 12 months). It is important to note that the amendment would not allow states to automatically rate up consumers with pre-existing conditions. The amendment only allows for insurers to underwrite consumers with pre-existing conditions if they do not have continuous coverage in states where a waiver has met all conditions to be approved.
Waivers may be approved for a period of up to 10 years, providing they continue to meet the conditions of the waiver, and any waiver submitted by a state would be automatically approved if they are not notified of a denial within 60-days of submission. Waivers that seek to permit health status underwriting would also be contingent on the state providing financial assistance to high-risk individuals to obtain individual market coverage, providing incentives to appropriate entities to help stabilize premiums, and participating in the “Federal Invisible Risk Sharing Program,” which includes $15 billion in federal funding between 2018 and 2026 as a reinsurance mechanism to reimburse insurers for high-cost plan enrollees.
The invisible risk sharing funding was joined by two additional high-risk funding pools to bring a total of $138 billion in the amended bill overall. The original bill included $100 billion over 10 years for the Patient and State Stability Fund, and in addition to the $15 billion in invisible risk sharing, the two other amendments passed since the bill was initially considered in March include $15 billion for funding for maternity, mental health, and substance abuse care, and $8 billion specifically added for additional high-risk pool funding as a result of the MacArthur Amendment. The CBO report cautions that this funding would have a small effect and not be sufficient to reduce large increases for high-cost enrollees. For comparison, the report notes that the ACA’s pre-existing condition insurance pool covered 100,000 enrollees at a cost of $2.5 billion over two years. Further, the Patient and State Stability Fund would require significant funding by states in the out-years; states would initially only be required to provide 7% of matching funds, but this would grow to 50% required by 2026.
With these amendments and the increased state flexibility for how the AHCA would now be implemented at the state level, the CBO performed an extensive analysis of the impact of the legislation. Overall, the CBO found that it would result in a net savings to the federal government of $119 billion, a result of $1.1 trillion in reduced spending over 10 years while revenues would be reduced by $992 billion. The bulk of the reduced spending, $834 billion, comes from repealing the ACA’s Medicaid expansion and another $236 billion comes from replacing the current advanced premium tax credits ($665 billion) with less generous tax credits in the AHCA ($375 billion).
The reduced revenue is largely due to repealing the majority of the ACA’s taxes (a loss of $664 billion in revenue), of which $275 billion would come from eliminating the net investment tax, $145 billion from the health insurance tax (HIT), and additional lost revenue from taxes unrelated to health coverage proposals. The CBO also projects that delaying the Cadillac/excise tax until fiscal year (FY) 2025, as written in the AHCA, would cost the federal government $49 billion in lost revenue. Revenue would further be reduced by effectively eliminating the ACA’s individual and employer mandates by reducing those penalties to $0, although they would still statutorily exist. The employer mandate makes up most of this at $171 billion, while individual penalties would result in $38 billion in lost revenue.
The biggest cause of the increase in the uninsured rate is due to the elimination of these penalties. As with the previous report, the new report estimates that 14 million Americans would become newly uninsured next year under the AHCA, gradually increasing to 23 million for a total of 51 uninsured by 2026. The AHCA as amended would not result in as many individuals losing employer-sponsored insurance (ESI) as previously estimated. The CBO projects that there would be 1 million fewer people enrolled in ESI in 2020 (compared to 2 million in the previous estimate) and by 2026 there would be 3 million fewer enrolled in ESI, compared to 7 million as previously projected. The revised estimates are largely due to individual health insurance being far less comprehensive and individuals opting to enroll in employer coverage instead to avoid higher out-of-pocket expenses.
The employer-based market currently enrolls more than 175 million Americans in health insurance coverage and NAHU strongly supports measures to maintain this system. As with the previous CBO report, NAHU remains concerned about the impact of the AHCA on ESI. The new report reiterates the previous assumption, which projected a gradual erosion of ESI, stating that over time, some employers would decline to offer insurance to their employees due to the loss of the mandate penalties and because the AHCA’s tax credits would be available to a broader group of individuals than those under the ACA. It expects that both employers and employees would decide against coverage, with some employers opting to drop coverage as employees would be eligible for tax credits, and some individuals who are offered ESI choosing not to enroll given the absence of tax penalties for being uninsured. Notably, previous CBO reports similarly expected that the ACA would result in a drop in employer-based coverage, a projection that has not materialized.
The report notes that premiums would generally be lower in the individual market because the health plans would be less comprehensive and cover fewer benefits and a smaller share of healthcare costs for the consumer. Additionally, there would be considerable cost-shifting on enrollees with significantly more out-of-pocket expenses, particularly those enrollees who use services that are no longer covered by plans, who would see substantial increases in out-of-pocket expenses. The CBO projects that consumers in this situation, such as those who require expensive prescription drugs no longer covered by health plans, could have increases of thousands of dollars in out-of-pocket expenses each year. Some consumers may choose to purchase policies with riders for specific conditions for this reason, particularly for maternity coverage.
The report notes that while premiums would generally go down for individual market insurance, net premiums after factoring for tax credits would range considerably depending on the particular consumer. Older people with lower incomes would see dramatic increases in their net premiums, while younger people with lower incomes would see little change, and people with higher incomes would see their net premiums reduced as they could access tax credits previously unavailable to them. And while overall more individuals will be able to access the tax credits under the AHCA, those subsides are far less generous than those under the ACA. The report illustrates the effect on a 64-year-old at 175% of the poverty level; under current law with a $15,300 premium, they would have a tax credit of $13,600 and a net premium of $1,700; under the AHCA’s flat tax credits, they would only be eligible for a tax credit of $4,900 and with an adjusted premium of $21,000, they would face a net cost of $16,100 in premiums alone—nearly ten-fold over the ACA and roughly 60% of their total annual income on health insurance premiums alone.
Additionally, some individuals may be able to purchase policies that would have no net cost to them, as the existence of a baseline level of tax credits could encourage some insurers to offer skinny plans at the value of the tax credit. However, the CBO cautions that these plans would effectively not provide enough financial protection in the event of catastrophic care needs to legitimately be considered insurance.
The CBO effectively made three separate estimates based on how states could respond to the AHCA as passed with the MacArthur Amendment. The first is the group of states that choose not to apply for waivers, which cover roughly half of the population, and would likely be among the seven states that prohibited medical underwriting before the ACA. The second is those that apply for limited waivers, which cover a third of the population, and would be likely be among the 11 states that had limitations on medical underwriting. And the third is states that apply for waivers to significantly modify EHBs and community rating rules, which cover a sixth of the population, and are among the 32 states that had no limitations on medical underwriting. States with lower premiums would generally fall with those that eliminate one or more EHB categories that were not typically available prior to the ACA.
The AHCA would bring needed stability for much of the country’s health insurance markets; however, states that choose to pursue the waivers created under the MacArthur Amendment would conversely become more destabilized. The states that opt for waivers to allow for medical underwriting or to modify their EHBs to eliminate the ACA’s ban on annual and lifetime limits would lead to significant increases in expenses for some consumers. The CBO notes that many of these individuals with pre-existing conditions could face markets where coverage would be either prohibitively expensive or they might not be able to purchase coverage at all. Additionally, many consumers move in and out of the individual market as access to insurance changes and many of these could fail to meet the continuous coverage requirement. As healthier consumers move to medically underwritten plans, the community-rated plans will become increasingly filled with less healthy consumers, and therefore become increasingly more destabilized. 
The updated CBO report marks an important milestone for the AHCA. Republicans tasked themselves with coming up with a reconciliation bill that would reduce the deficit by a minimum of $2 billion over 10 years. After passing the AHCA as amended without an updated score, the House had initially delayed sending it over to the Senate to ensure that it would meet the benchmarks laid out in the reconciliation instructions. Had the CBO report indicated that the bill didn’t meet these requirements, the House would have had to once again vote on an updated bill that would meet them. And had the bill already been enrolled by the Senate with a score that didn’t meet the requirements, they would no longer have been able to use the FY 2017 reconciliation vehicle for healthcare and either would have had to use the FY 2018 reconciliation vehicle they planned for tax reform, or wait until next year to try again. Because the new score by the CBO meets the requirement by projecting a net savings of $119 billion, the bill can now be enrolled with the Senate and they can formally begin deliberations on their version of health reform.

The American Health Care Act (AHCA) Passes the U.S. House

THE AMERICAN HEALTH CARE ACT (AHCA) PASSES THE U.S. HOUSE

From CIGNA Informed on Reform           

http://ow.ly/4up230bt5gk

Today the U.S. House of Representatives passed an amended version of the American Health Care Act (AHCA) by a vote of 217-213. House Republicans crafted the AHCA as a budget reconciliation bill to repeal parts of the Affordable Care Act (ACA). The bill was previously debated on the House floor, but pulled before a full vote on March 24. Since that time, several amendments were added to the bill, paving the way for Republican leadership to reintroduce the bill for a successful vote.

Passage of the bill in the House marks a milestone in the Republican efforts to repeal and replace the ACA; however, the bill will face new challenges in the Senate. Here’s what we currently know — and don’t know — about the next steps to help you stay informed.

What’s Next: AHCA Moves to the U.S. Senate
Without bi-partisan support, Congressional Republicans cannot fully repeal the ACA in one action. By using the budget reconciliation process, only a simple majority (51 votes) is needed for passage in the Senate — and there are 52 Republican senators. Even with a Republican majority, the bill faces an unclear path forward.

The Republican leadership in the Senate will first need to decide if they want to consider and amend the House bill, or substitute their own version of a reconciliation bill, which may contain parts of the House bill.

Additionally, the Senate must follow procedural rules that don’t apply in the House. Under Senate reconciliation rules, the nonpartisan Senate Parliamentarian must first review and confirm the bill and any amendments comply with the rules for reconciliation, known as the Byrd Rule. For example, insurance market reforms that are currently in the AHCA may not be allowable under the Byrd Rule, if it is determined they don’t have direct spending impact.

The Parliamentarian’s analysis requires a Congressional Budget Office (CBO) score (cost estimate). While the CBO scored an earlier version of the AHCA, the recent amendments require the CBO to update its cost estimate, meaning it could be a few weeks before the Senate can bring a bill to the floor for debate and an eventual vote.

Identical versions of the bill must pass both chambers before being signed by the President and becoming law. If the Senate passes a bill that isn’t identical to what the House passed, there are two paths forward: 1) the House could pass the Senate bill and send it to the President; or 2) a bicameral conference committee can meet to negotiate a new compromise bill. That negotiated bill would then have to be passed by both chambers, before sending it to the President for signature. It is unclear which option might be used in this instance. 

Timing is unclear for these next steps to occur, but there continues to be support from the Administration to move forward with repeal and replace of the ACA this year.

Reminder: ACA Compliance is Required Until Official Guidance Otherwise
As a reminder, ACA compliance is required until official guidance to the contrary is issued. The House passage of the AHCA is the first of several required steps before any official changes are enacted. For a customized timeline and more information about ongoing annual responsibilities and applicable employer deadlines under the ACA, visit YourACARoadmap.com

 

Staying Informed
To stay up to date on the evolving state of health care reform, visit www.InformedOnReform.com, including the new Repeal and Replace Update webpage. This page offers a snapshot of the latest regulatory and legislative activity. 

Congressional Republicans Continue Working on Possible Path Forward for Health Reform

Congressional Republicans Continue Working on Possible Path Forward for Health Reform

 

From NAHU Washington Update

@nahudotorg

NAHU

As congressional groups met this week to work out their differences in the wake of the decision two weeks ago to scrap the American Health Care Act (AHCA), President Donald Trump made a late plea on Wednesday urging Congress to vote on a repeal of the ACA before they left town for their two-week Spring Recess. While Congress opted against voting again on the AHCA this week, they did pass a reinsurance amendment to the AHCA and a separate bill that re-affirms the purpose of stop-loss insurance. Congress is now back in district and is set to return the week of April 24, when they will quickly face a tight deadline to pass a new budget agreement by April 28 to prevent another government shutdown.

After being notified late Wednesday that it would be called into emergency action to consider an amendment to the AHCA, by Thursday afternoon the House Rules Committee voted 9-2 along party lines to add language to the reconciliation bill to create a $15 billion “Federal Invisible Risk Sharing Program” to help insurers cover the costs of their sickest enrollees. The amendment is sponsored by Representatives Gary Palmer (R-AL) and David Schweikert (R-AZ) from the House Freedom Caucus and is similar to the ACA’s temporary reinsurance program that expired at the end of 2016. This reinsurance program is separate from and would be in addition to the AHCA’s “Patient and State Stability Fund,” which is designed to expand coverage, increase insurance options, promote access to benefits, and reduce out-of-pocket spending through $10 billion in annual funding over 10 years.

The new reinsurance program would provide states with $15 billion in funding between 2018 and 2026 to reimburse insurers for high-cost plan enrollees. The program would not function as a traditional high-risk pool, as individuals would continue to buy coverage from the individual market, but if they have certain medical conditions, federal funding would cover their claims cost. This could help bring stability to the fragile market and reduce premiums for all consumers in the individual market. The amendment is short on specifics, including which medical conditions would be covered or how insurers would apply for reimbursement, and instead defers to the federal and state agencies to implement the program. It would also permit states to be able to take over the program in 2020, although there aren’t details on how that would work.

A study by Milliman and the Foundation for Government Accountability found that this amendment could help lower premiums by an average of 31% and result in 2 million fewer uninsured individuals . The study includes several assumptions on provisions that were not included in the amendment, including that the reinsurance would only cover claims that exceed $10,000, that the reimbursements would be made at Medicare rates and not those negotiated by the insurers, and that insurers would transfer the full premiums of these consumers directly to the government in exchange for the protections of the reinsurance program. An earlier version of the amendment included some of these details, but because the amendment that was ultimately passed opted to defer to rule makers to implement, it is unlikely that, should the AHCA be passed with this provision, that it would conform to the study’s assumptions.

Meanwhile, the House voted 400-16 on Wednesday to pass H.R. 1304, the Self-Insurance Protection Act. The bill is sponsored by Representative Phil Roe (R-TN) and clarifies that medical stop-loss insurance cannot be redefined as health insurance coverage at the federal level. The bill would change the federal definition of “health insurance coverage” to make these clarifications that stop-loss plans cannot be regulated as health insurance by amending sections of the Employee Retirement Income Security Act, the Public Health Service Act, and the Internal Revenue Code. The Obama Administration had previously increased oversight of self-insured plans as small employers increasingly moved from the fully insured market to the self-insured market to avoid the ACA’s coverage requirements. H.R. 1304 now heads for consideration by the Senate where there is not a companion bill.

Throughout the week, congressional Republicans have been continuing their discussions over how to tackle health reform moving forward. There remains significant disagreements between members of the far-right House Freedom Caucus and the centrist-Republican Tuesday Group and by the end of the week both groups seemed to admit that there is still no clear path forward. Representative Chris Collins (R-NY), a member of the Tuesday Group, doubted that a deal would ever be possible, noting his discouragement with hard-liners for never being satisfied with the concessions they are given, “The Freedom Caucus continues to play Lucy with the football,” and that, “Nothing’s going to change and they’re not there now. What would get them there?”

Vice President Mike Pence led the White House’s efforts this week to bring the two factions together. However, each of the concessions that Pence tried to win the support of Freedom Caucus members were quickly panned by centrist and mainstream Republicans. This included a proposal that would allow states to opt-out of the ACA’s essential health benefits and community rating provisions. While there would still be a prohibition on excluding individuals with pre-existing conditions, this would allow insurers to charge them more for coverage.

This proposal was later pared down to just allowing states to opt-out of minimum health benefits and narrowly increasing flexibility with age-rating bands, which led to confusion and consternation among members of both groups, as Freedom Caucus members saw the proposal as falling far short of their requests while the Tuesday Group thought that the proposal went too far. This has led to blame being cast by members of both groups and outside organizations, including Heritage Action, which called out the moderate Republicans saying, “They’re opposed because they do not want to repeal Obamacare” and “They do not believe in the basic premises of the Republican party.” Meanwhile, Representative Collins of the Tuesday Group cast blame on House Speaker Paul Ryan (R-WI) and House Majority Leader Kevin McCarthy (R-CA), “I’ve been extremely unimpressed at this point with the job House leadership is doing.”

Following the proposal’s rejection, the White House’s discussions with Speaker Ryan and Majority Leader McCarthy culminated in the demand for Congress to hold a vote on the bill before the two-week break and prompted the Rules Committee vote on the reinsurance amendment. While the House opted against holding a vote this week, just prior to leaving for the break, McCarthy claimed that members could be called back at some point during the recess to vote on a new healthcare package. But with a full calendar of items they must pass awaiting their return—including avoiding a government shutdown and re-authorization of the Prescription Drug User Fee Act—it is unlikely that repeal efforts will be seriously considered until May at the earliest, assuming Republicans determine there is any possibility for crafting a policy solution that will satisfy all constituencies of the party.

As Republicans continue to hash out these disagreements, the White House’s congressional liaison and the conservative-leaning Blue Dog Democrats held a meeting to discuss various issues where they could find agreement. President Trump previously noted that he may need Democratic support to push through his agenda items after Republicans have shown sharp policy disagreements. Yet, Democrats have also pushed back at the administration, including a score of Senate Democrats who called out Health and Human Services Secretary Tom Price for sharing a list of proposed regulatory changes with House Republicans and not Democrats during negotiations over the AHCA, and requested that the administration provide those changes and to work with Democrats on improvements to the ACA.

Democrats have also been relaying their concerns with the White House over the ACA’s cost-sharing reduction subsidies, imploring the administration to continue challenging the House of Representative’s lawsuit on their validity. Nine Democratic senators sent a letter to Attorney General Jeff Sessions this week noting their critical importance to the stability of the marketplaces. In February, the administration was granted a 90-day postponement of the case to determine how to proceed with the case. A federal judge had previously ruled that the subsidies were invalid, and if the administration were to drop their challenge then the payments made by the government to insurers would cease, while insurers would still be required to provide the roughly $9 billion in combined annual subsidy payments to individuals, likely causing insurers to abandon the marketplaces and throw them into chaos.

Pulling the plug on Healthcare in the US – Dissecting the Regular Facts from the Alternative Facts

Pulling the plug on Healthcare in the US – Dissecting the Regular Facts from the Alternative Facts

 

With all cards on the table, is this Pay or Play 2.0?

 

Where do we stand now?

New changes in the last 24 hours were made among them:

1. Repeal the 10 essential health benefits mandate (Conservative Caucus)
2. Add an addition $15B into a flexibility fund (for states to manage Medicaid) (Coverage Caucus – side note here – Senator Cassidy R-LA – who worked with Senator Collins R-ME on a separate bill is heading the coverage caucus as they are working to keep coverage in the Medicaid programs)
3. Keep the .9% Medicare tax for high-income earners making over $200,000 filing single for six more years – this would be to keep bringing in new revenue (This was originally in the bill to sunset as of 2018, then adjusted to sunset this year but looks to be sunsetted in 6 years)

 What else did I miss?

Earlier this week, additional changes were made to the bill as it was attempted to garner enough votes to pass on the floor of the House.  Most of these are changes in implementation dates to appeal to different parts of the House GOP.

1. Moving the repeal of the Tanning & Medical Device tax from 2018 to 2017
2. Moving the repeal of the business tax cap for executives in health insurance companies from 2018 to 2017
3. Sunset new Medicaid expansion for states that have not expanded from 2020 to 2017 (Kansas is currently trying to expand Medicaid as we speak)
4. NY Representatives add an amendment to move $2.3B Medicaid costs from local (county – excluding large metropolises like NYC) to the State Budget
5. Lower the medical expense deduction from 7.5% under the original bill now to a new low of 5.8% and to move up implementation from 2018 to 2017
6. Delay Cadillac tax from 2025 now pushed out to 2026
7. Repeal the maximums and over the counter medication bans on Flexible Spending Accounts from 2018 to 2017
8. Increase the HSA limits to maximum out of pocket costs from 2018 to 2017

What does this all mean?  Well, to be absolutely frank – not much, if they don’t have the votes today.  What does it mean in the future, though, EVERYTHING.  

I don’t think you will find someone who doesn’t think we have work to do on the ACA.  I am the first to say it.  I also think that we have to get a bi-partisan committee to work together with consumer groups; AARP; AHIP; AHA; AMA and the healthcare consulting (i.e. the broker) community.  We are in the battle on a daily basis.  We know what can work and what should work and this needs to be done right and it needs to be done soon.

There are good ideas out there and we have to approach this on a more macro level and look at the outside forces that are affecting the current delivery system, i.e. lowering the cost of pharmaceuticals by introducing competition; providing incentives for smaller companies to do more development on generic alternatives; banning pharmaceutical companies from shelving generic patents when they become available; more efficient medical record data sharing; cutting out redundancy; providing affordable medical malpractice insurance programs to incent OBGYNs and other speciality providers who want to provide care but can’t afford the malpractice premiums; identifying high-cost chronic conditions and look at possibly pooling them into a national program such as Medicare, as we do with End Stage Renal Disease; providing TRANSPARENCY to the consumer by giving them the means to shop for a procedure with outcomes and cost as easily as they can today with houses; technology and cars; getting more funding and education to fight the opioid epidemic.

We cannot continue to kick the can down the road, adjust the programs to suit a small group of interest.  The health of this country is at stake; the health of its citizens are at stake and millions of jobs are at stake.  We need to pull this out of the halls of Congress and get the experts, who manage this, at the table now before it is too late.  

There are solutions, there is a way – but we have to do this together with experts and support it as a country.  This is one thing neither party should own but every party should want to see succeed.  


 

Pulling the plug on Healthcare in the US – Dissecting the Regular Facts from the Alternative Facts

Dismantling the employer option . . . and then there were none    There is a well known English nursery rhyme by Mother Goose, about an egg that sat on a wall and had a great fall.  All the king’s horses and the all king’s men could not put that poor egg back together again. As we have been following the repeal and replace of the Affordable Care Act (ACA) or aka – Obamacare, the elimination or capping of the employer tax-exclusion on employer sponsored benefit programs, has been brought up again.  This idea has been floating around for the last couple of years as a way to increase revenue and now looked at as one potential revenue funding option in a replacement to the current Affordable Care Act (ACA). So what is the employer tax – exclusion? Currently employees are NOT taxed on the employer paid portion of their benefits for income and payroll tax purposes. Under this new regulation, the employer paid portion of premiums could end up being considered taxable income.  In addition, the employer could face higher FICA (Federal Insurance Contributions Act) matches, which would be an added financial burden to the employer.   FICA is made up of the employer and employee both contributing equal shares of Social Security Tax (6.2%); Medicare Tax (1.45%) for a total of 12.4% and 2.9% respectively.  Currently there is a cap on Social Security, so once you have paid this tax on $127,200, you no longer pay the 6.2% Social Security tax.  You can find more information on this and additional taxes HERE. We are sitting in a precarious situation if we start to look changing or altering the current employer model, as part of the repeal and replace.  The Kaiser Foundation has data showing 156 million Americans covered through employer based plans through the end of 2015.  As of 2017, approximately 175 million Americans receive healthcare through the employer based model. Remember the risk pools?  The employer based market is heavily involved in helping to balance risk pools by spreading out the costs of the healthy and unhealthy covered employees. If the employer has no incentive to offer these benefits to their employees, or they end up costing both the employee and the employer more money, the employer could easily have their employees go to the individual marketplace to purchase their coverage by offering a salary increase to the employee to offset some of the costs.  This would mean higher income taxes to the employee.  The costs in the individual market are higher; the choices are lower and employees would lose the benefit of having their employer advocate in coverage disputes. If Congress decided, instead, to cap the employer-tax exclusion, this would in turn, cause the employer to look at providing less rich benefit to employees, to stay underneath the maximum premium cap so not to trigger a tax.  This would push employees to higher out of pocket costs and possibly shift the cost of the premium from the employer to the employee at a faster rate then we are seeing today. The employer-sponsored health insurance is a valuable benefit and a keystone to the American worker and a financial foundation for the healthcare system today.  If we attempt to upset this model, while undergoing additional repeal and replacement options, we run the risk of the entire system breaking, just like that egg.  And there is not a king nor a horse strong or powerful enough to be able to pick it up, once the system has fallen off the wall.   ]]>

Republicans Face Dilemma on Timing of Health-Law Replacement

Do they act before or after the 2018 midterm elections? Either choice carries political risks

The Wall Street Journal
By Stephanie Armour and Kristina Peterson
Dec. 9, 2016 7:00 a.m. ET

WASHINGTON—Republicans united in their desire to overturn the Affordable Care Act are divided over whether to replace it before or after the 2018 elections, a choice that holds political peril either way.

Waiting until after the midterms could pose a political risk to the most conservative Republicans who campaigned on the repeal and whose constituents want the law to be gone as quickly as possible.

But passing a hastily-written replacement for the complex law could create chaos in markets and leave millions without health insurance. Some Senate Republicans believe putting a new system in place could take until 2019 or longer.

Along with likely legislative action by Republicans in January to dismantle parts of the ACA, President-elect Donald Trump is expected to take executive action that would weaken parts of the law. House Republicans also are likely to seek to cut off federal funding for Planned Parenthood Federation of America.

Midterm elections tend to disfavor the party that controls the White House, and Republicans are aware of the drubbing Democrats took in 2010, after they enacted the law with almost no Republican support.

“One of the lessons we learned from Obamacare is that partisan legislation is not sustainable and what we need to do is go back to the old-fashioned way” of reaching bipartisan consensus, Senate Majority Whip John Cornyn (R., Texas) said this week.

A transition period would be aimed at preserving health insurance for the roughly nine million consumers who get tax credits to offset premiums. “There needs to be a reasonable transition period,” House Speaker Paul Ryan (R., Wis.) said Thursday. “It’s just premature to suggest that we know exactly how long this transition will last.”

Some House Republicans insist a replacement can be done in two years or less. Their calculus is that getting rid of the law early in 2017 with a short or no transition period would force action on its replacement. “The only way this gets done is if our backs are against the wall,” said Rep. Mark Meadows (R., N.C.), chairman of the conservative Freedom Caucus.

Senate Republicans have indicated they want Democratic buy-in for their health-care overhaul. Finance Committee Chairman Orrin Hatch (R., Utah) said “three years would be better” for a transition, but acknowledged there is pressure from the House to move faster.

If House Republicans who want a speedier replacement defect, the House could lack enough votes to push through a three-year replacement plan. The clash also reflects the difficult path ahead for Mr. Ryan, who wants to keep the GOP united in its repeal and replacement plan.

“This election showed that people want things done now,” said Rep. Roger Williams (R., Texas). “People in America deal in real time and they want real-time solutions.”

Democratic leaders have signaled they are unlikely to cooperate, at least in the initial repeal phase, while some in the party up for re-election in 2018 in conservative-leaning states may feel pressure to fill the void if the law has been repealed.

“They have nothing to put in its place, and believe me, just repealing Obamacare even though they have nothing to put in its place and saying they’ll do it sometime down the road will cause huge calamity from one end of American to the other,” said Sen. Charles Schumer of New York, the next Democratic leader.

Each party will face political headwinds going into the 2018 midterms. Senate Democrats will be defending 25 of 33 seats in play, putting them at a disadvantage.

But Republicans will have political ownership of the health-care law at a time it is likely to still be in flux—and possibly in turmoil. And because they will control Congress and the White House, any voter angst could favor the Democrats in a sort of reverse dynamic of 2010

Senate Republican Leaders Vow to Begin Repeal of Health Law Next Month

THE NEW YORK TIMES
By ROBERT PEAR
DEC. 6, 2016

WASHINGTON — Senate Republican leaders, after meeting with Vice President-elect Mike Pence, said on Tuesday that they would move immediately next month to start repealing the Affordable Care Act, despite qualms among some of their members.

“The Obamacare repeal resolution will be the first item up in the new year,” said Senator Mitch McConnell, Republican of Kentucky and majority leader.

Republicans have not fleshed out a plan to replace the 2010 health care law, President Obama’s signature legislative achievement. But on Tuesday they laid out their principles for a replacement plan and said they would try to minimize disruption for the 20 million people who have gained coverage under the law.

Senate Republican leaders appeared to agree with House Republican leaders on a “repeal and delay” strategy, which could keep parts of the health law in place for several years, as Congress works with the administration of Donald J. Trump to devise a replacement.

The Senate Republican strategy would start the repeal process in early January and could defer the effective date for several years, but not all party members were on board.

“They have to be done together,” said Senator John McCain, Republican of Arizona, referring to efforts to repeal and replace the health law. “We don’t want to have people left out.”

Democrats vowed to fight for preservation of the health law, on which public opinion has been deeply divided for six years.

“Bring it on!” Senator Chuck Schumer of New York, the next Democratic leader, said to Republicans. “Just repealing Obamacare, even though they have nothing to put in its place, and saying they’ll do it sometime down the road will cause huge calamity from one end of America to the other.”

Many health policy experts say the law has been beneficial. But Senator John Thune of South Dakota, the No. 3 Senate Republican, said: “It’s well documented, everybody agrees, both Republicans and Democrats, that Obamacare has serious problems. I would say it’s been a failure, and I think the American people agree.”

After repealing the law, Mr. Thune said, Republicans will proceed step by step to develop a replacement, built around four principles: States, not the federal government, should have the primary responsibility for health policy. Patients and doctors should be “in control.” There should be more competition among health plans, so consumers would have more choices. And small businesses should have more discretion and flexibility to configure health benefits for their employees.

After their lunch on Tuesday with Mr. Pence, many Senate Republicans were energized. After the inauguration of Mr. Trump, the schedule will be “very aggressive,” said Senator Michael Rounds, Republican of South Dakota.

But other Republican senators were still mulling their strategy.

Senator Bob Corker, Republican of Tennessee, suggested that it might make sense to repeal and replace the heath law at the same time, and that there could be pitfalls in deferring a replacement for several years.

“People are trying to figure out the best route,” Mr. Corker said. “It’s not really repeal if it’s still in place for three years.”

Senator John Barrasso of Wyoming, a member of the Senate Republican leadership, said Congress would need time to develop a replacement.

“Health care has been driven into the ditch by President Obama and this health care law,” Mr. Barrasso said. “It will take time to get the cart out of the ditch.”

Senator Susan Collins, Republican of Maine, said she supported efforts to repeal and replace the health law, but not Republican efforts to cut off federal funds for Planned Parenthood clinics. Last December, she voted against a budget bill that would have repealed major provisions of the health law because it would also have terminated funds for Planned Parenthood.

“Under the incoming administration, Republicans and Democrats will have a new opportunity to fix Obamacare, and there is a lot to fix,” Ms. Collins said on Tuesday, noting that premiums for health plans on the exchange in her state were increasing an average of 22 percent next year.

Final 1095-C 2016 Forms and Instructions for IRS Reporting Requirements

On October 3, 2016, the Internal Revenue Service (IRS) released final 2016 Forms 1094-C and 1095-C and their accompanying instructions. These forms and instructions will be used for Affordable Care Act (ACA) Applicable Large Employer reporting (for compliance with the ‘employer mandate’) and self-insured large group Minimum Essential Coverage (MEC) reporting for coverage offered in calendar year 2016.

In September 2016, the IRS released final 2016 Forms 1094-B and 1095-B and the applicable instructions for insurance carriers and small employers who self-insure their group health plans to report MEC.

Changes to Form 1094-C are minimal from the 2015 Forms. The most notable changes include:

• Line 22 is “Reserved,” as it pertained to the “Qualifying Offer Method Transition Relief,” which is not applicable to 2016 coverage.
• Part III, column (b) includes a new distinction, “Section 4980H” before “Full-Time Employee Count for ALE Member.” This is intended to remind filers that only the section 4980H definition of “full-time employee” should be used in this column (no other definition can be used).

Changes to Form 1095-C are also minimal from the 2015 Forms, but include these more prominent updates:

• New language below the form title states “Do not attach to your tax return. Keep for your records.” This is intended to help prevent individuals from submitting the form with their tax return.
• Line 15 has a revised header, “Employee Required Contribution (see instructions).”
• Lines 14 and 16 have certain codes “Reserved,” as they no longer apply to 2016 coverage, and new codes (1J and 1K) have been added to Line 14.
• Transition relief available to employers for 2015 under sections 4980H and 6056 has limited applicability in 2016. References to transition relief that applied only in 2015 have been removed. Descriptions of the remaining forms of transition relief have been amended to clarify for which months in 2016 the transition relief applies (description and when it applies is available in Section 4980H Transition Relief for 2015 Plan Years).

The 2016 IRS Forms 1094-B and 1095-B have similar changes for reporting 2016 coverage in 2017. The instructions for both sets of forms include applicable code information to help ensure correct reporting for each line item.

Instructions for Froms 1094-C and 1095-C, used by applicable large employers, i.e., those subject to the employer mandate. Self-insured plan sponsors complete the entire Form 1095-C:

Form 1095-C

Form 1094-C (a transmittal/cover sheet) to the IRS:

Form 1094-C

Form 1095-C to both the IRS and individuals. Applicable large employers with insured plans will only complete Parts I and II of Form 1095-C:

Form 1095-C

Marketplace Appeals — The Results Are Coming In

by nahucompliance

At the risk of sounding like Nick Cannon on the television show America’s Got Talent when they’re announcing performers advancing to the next round of competition, employers are beginning to see the results of appeals that they’ve filed when employees receive subsidies in the marketplace. Employers are finding some of these appeal decisions perplexing, especially when an appeal is denied. And, some employers fear that penalties will follow as a result of the lost appeal.

First, and of most importance, the marketplace appeal does not determine if an employer has to pay an employer shared responsibility penalty to the IRS. This point is made clear on both the appeals form and on the webpage that addresses employer appeals: https://www.healthcare.gov/marketplace-appeals/employer-appeals/

Second, an appeal that is denied may be due to the particular facts and circumstances of the employee and his/her family. In particular, even though an employer may have offered coverage that meets the minimum value and affordability safe harbors, the measure of affordability at the marketplace is based on household income. Household income may be quite different from an employee’s W-2 income. The marketplace’s decision regarding an employer’s appeal will not reveal personal and income information of the employee subject to the appeal.

The appeal decision letter explains that the marketplace will not consider whether an employee is a full-time employee or whether the employer employs 50 or more full-time employees and is subject to the employer shared responsibility payments. The reasoning cited in the letter is that “neither of these issues affect the employee’s eligibility for advance payments of the premium tax credit and cost-sharing reductions (if applicable).

Another employer found that the information which the employer sent to support their appeal did not go far enough. The employer submitted proof that the employer had offered coverage to the employee that met minimum value and was affordable. The hearing officer wanted proof of this offer in the form of the employee’s response to the offer. Employers that have been reluctant to require that employees sign waivers when they decline coverage may decide to require signed waivers or take other steps that can buttress the fact that an offer was made and rejected.

A review of several decision letters finds that decisions often cite “insufficient information” as the basis for the decision to reject the appeal. Employers may want to develop a checklist of materials that they will provide to ensure that appeals are not lost for want of more information.

Still other employers have received a letter while an appeal is under review that asks for more information to support the appeal.

While marketplace appeal decisions are not triggers for IRS penalties, a successful marketplace appeal may be helpful if the IRS does attempt to penalize an employer. The successful appeal would be another piece of information for an employer to include in the IRS appeal’s process. And, whether an appeal is successful at the marketplace level, or not, an employer will have already collected information that would be required to appeal an IRS penalty determination should one be received.

IRS Publishes 2016 Draft Forms for ACA Reporting

IRS Publishes 2016 Draft Forms for ACA Reporting

With the first ACA reporting deadlines for employers in the rearview mirror, the IRS has released draft forms for 2016. These drafts, if finalized, will be used when employers file in 2017.

The deadlines for reporting of 2016 health coverage are expected to return to the original dates:

– Deadline to distribute forms to employees and covered individuals will be January 31, 2017
– Deadline to file paper forms with the IRS will be February 28, 2017.
– Deadline to file electronically with the IRS will be March, 31, 2017.

The draft forms offer few changes from the 2015 forms. Of note, the line 14 code series reflects wording changes in a few codes and new codes 1J and 1K. These new codes discuss conditional offers of coverage to spouses.

Also, the “Plan Start Month” box on Form 1095-C will continue to be optional for 2016.

Draft instructions for employers to complete the forms have not been issued at this time.

Filing for 2016 will reflect several differences that we will expect to see reflected in the instructions to complete the forms. Chief among these is that employers will be required to offer minimum essential coverage to at least 95% of full-time and full-time equivalent employees to avoid the A “no offer” penalty. Transition relief was available for the 2015 coverage year that required an offer to 70% of employees to meet the requirement to offer coverage.

Early releases of all draft forms are at www.IRS.gov/draftforms.

(Go to 7/7/2016 release date)

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