Next Steps

• The Congressional Budget Office (CBO) released its cost estimate on Monday, June 26, 2017.
• The Senate will begin the voting process on the bill after the Fourth of July holiday.
• The Senate and House versions will have to be reconciled.  This can be done with a conference committee, or by sending amendments back and forth between the chambers.  With a conference committee, a conference report requires agreement by a majority of conferees from the House, and a majority of conferees by the Senate (not both together).  Alternatively, the House could simply agree to the Senate version, or start over again with new legislation.

The BCRA

Like the AHCA, the BCRA makes numerous changes to current law, much of which impact the individual market, Medicare, and Medicaid with effects on employer sponsored group health plans. Also like the AHCA, the BCRA removes both the individual and the employer shared responsibility penalties. The AHCA also pushes implementation of the Cadillac tax to 2025 and permits states to waive essential health benefit (EHB) requirements.

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The BCRA would change the excise tax paid by health savings account (HSA) owners who use their HSA funds on expenses that are not medical expenses under the Internal Revenue Code from the current 20 percent to 10 percent. It would also change the maximum contribution limits to HSAs to the amount of the accompanying high deductible health plan's deductible and out-of-pocket limitation and provide for both spouses to make catch-up contributions to HSAs. The AHCA contains those provisions as well.

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Like the AHCA, the BCRA would remove the $2,500 contribution limit to flexible health spending accounts (FSAs) for taxable years beginning after December 31, 2017.

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The BCRA would also return permissible age band rating (for purposes of calculating health plan premiums) to the pre-ACA ratio of 5:1, rather than the ACA's 3:1. This allows older individuals to be charged up to five times more than what younger individuals pay for the same policy, rather than up to the ACA limit of three times more. This is also proposed in the AHCA.

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The ACA's cost sharing subsidies for insurers would be eliminated in 2020, with the ability of the President to eliminate them earlier. The ACA's current premium tax credits for individuals to use when purchasing Marketplace coverage would be based on age, income, and geography, and would lower the top threshold of income eligible to receive them from 400 percent of the federal poverty level (FPL) to 350 percent of the FPL. The ACA allowed any "alien lawfully present in the US" to utilize the premium tax credit; however, the BCRA would change that to "a qualified alien" under the definition provided in the Personal Responsibility and Work Opportunity Reconciliation Act of 1996. The BCRA would also benchmark against the applicable median cost benchmark plan, rather than the second lowest cost silver plan.

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44North hosted a webinar focused on the what and how of filing Form 720 on Tuesday, June 27th, at 11am.  Click here to view the webinar.

The IRS revised Form 720 (Quarterly Federal Excise Tax Return) in 2013 to include the reporting and payment of patient-centered outcomes research institute (PCORI) fees.  The Patient Protection and Affordable Care Act imposes the PCORI fee on certain health insurers and self-insured health plan sponsors for policy or plan years ending on or after October 1, 2012 and before October 1, 2019 to help fund clinical effectiveness research.  

The insurer or plan sponsor filing Form 720 must report the average number of covered lives under health insurance policies and self-insured health plans subject to the PCORI fee.  The instructions briefly explain the alternative methods for calculating the average number of covered lives, which include special transition rules.  The average number of covered lives is then multiplied by the rate per covered life ($2.00 as adjusted per year) to determine the amount of the fee.

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