Earlier this week, on March 6, 2017, House Republicans released their proposals to repeal and replace the Patient Protection and Affordable Care Act, commonly referred to as "Obamacare." The proposals would remove the existing individual and employer mandates that generally require health insurance, and that penalize individuals who do not have, and employers who do not offer, coverage meeting minimum essential health coverage requirements. The possible move to repeal and replace Obamacare is widely seen as having potential critical impact on health care in the United States, and on employers and the economy in general.
Under the proposals, the minimum essential health benefits requirement would no longer apply after December 31, 2019 and related premium tax credits would cease on the same date. The proposals would also repeal the provisions of Obamacare effective December 31, 2017 that (i) added limitations on the contributions to flexible spending accounts, (ii) increased the tax on health savings accounts from 10% to 20% and (iii) placed a tax on over-the-counter medications.
The proposed replacement includes new tax credits to assist individuals and families with their purchase of health insurance that range from US$2,000 to US$14,000 per year, depending, in part, on the age of the individual, income level and marital and family status. In addition, the replacement measure would add the concept of “grandmothered health plans,” referring to certain health insurance coverage offered in the individual health insurance market as of January 1, 2013, and “unsubsidized COBRA continuation coverage,” referring to COBRA continuation coverage where which no portion of the premium is subsidized by the employer. The replacement also makes other changes with respect to health savings accounts, including treating contributions as rollovers, creating certain a new regime for tax credits, increasing the maximum contribution to the amount of the deductible and out-of-pocket limitation and permitting spouses to make catch-up contributions.