Congress Clears Path for ACA Repeal

On Jan. 13, 2017, the U.S. House of Representatives passed a budget resolution for fiscal year 2017 to begin the process of repealing the Affordable Care Act (ACA).

The budget resolution does not, itself, repeal the ACA. However, any bill drafted as a result of the resolution is likely to include a number of provisions to repeal, or replace, ACA provisions. This budget resolution is a non-binding spending blueprint that is used to create federal budget legislation through a process called “reconciliation.” As a result, it does not need presidential approval and does not become law.

House and Senate committees have targeted Jan. 27, 2017 as the deadline to draft a budget reconciliation bill following the budget resolution, although some have indicated that the process may take longer. Once drafted, a reconciliation bill can be passed by both houses with a simple majority vote. If legislation is passed in both the Senate and the House by at least a simple majority vote, it would then go to President-elect Donald Trump for approval.

ACA Provisions That May Be Affected

Because this repeal is taking place as part of a budget reconciliation, Congress cannot repeal any ACA provisions that are not related to the federal budget (for example, the requirement to cover young adults to age 26 or the prohibition on pre-existing condition exclusions).

However, many of the ACA’s tax and spending provisions are likely to be affected. This may include a number of key ACA provisions, such as:

The individual mandate
ACA’s individual mandate requires most individuals to obtain acceptable health insurance coverage for themselves and their family members or pay a penalty. Because this provision is enforced as a tax, it is a key target for repeal through the budget reconciliation process.

The employer shared responsibility rules
ACA’s employer shared responsibility rules require applicable large employers to offer an acceptable level of health coverage to full-time employees (and their dependents) in their employee benefits program or pay a penalty. This provision is also enforced as a tax, and therefore, is also a key target for repeal through the budget reconciliation process.

Federal Exchange subsidies for low-income individuals
ACA created health insurance subsidies to help eligible individuals and families purchase health insurance through an Exchange. These subsidies have long been a target for opponents of the ACA and are currently being challenged in federal court. Therefore, it is likely that the budget reconciliation bill will include provisions affecting these subsidies.

Looking Ahead

Despite Democratic opposition, Republicans have enough votes in both the Senate and the House to pass a budget reconciliation bill to repeal aspects of the ACA. In addition, Trump has vowed to approve legislation repealing the ACA.

Nevertheless, there is growing concern over the impact that a full or partial repeal of the ACA would have on the American public. Although Republicans have expressed an intent to enact a repeal and replacement simultaneously, members of both parties have concerns over whether that may be possible.

If you’d like more information on the ACA repeal and how it affects your company, contact your Cornerstone Insurance employee benefits consult today.

This ACA Compliance Bulletin is not intended to be exhaustive nor should any discussion or opinions be construed as legal advice. Please contact us with questions at cig@cornerstoneinsurancegroup.com.

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