And when you add a constantly evolving political landscape, it can be difficult to keep track of proposed changes and how those changes might impact the way you purchase and use your health insurance plan.
On Thursday, May 4, the U.S. House of Representatives passed the American Health Care Act (AHCA) – by a 217-213 vote – that would dismantle and replace parts of former President Barack Obama’s Patient Protection and Affordable Care Act (ACA).
As the bill moves to the U.S. Senate, where it will face certain revisions with an uncertain timeline, here’s a quick rundown of what has been removed, what is being altered and what will stay the same if the bill were to become law.
Individual mandate
- ACA: Individuals must obtain health insurance or, depending on which is greater, pay a 2.5 percent tax penalty or $695 per adult. To be exempt from the mandate, a person must be suffering a financial hardship, have religious objections or fall within certain applicable areas.
- AHCA: The individual mandate would be eliminated under the proposed legislation, but insurers can add a 30 percent surcharge if a person has a lapse in health insurance coverage throughout the year.
Employer mandate
- ACA: Businesses with 50 or more full-time employees are required to provide a specific level of insurance or face tax penalties. It also allows employers to adopt wellness incentives for up to 30 percent of the cost of a group health plan. The incentives are increased to 50 percent if the program includes tobacco cessation efforts. Smaller employers are also eligible for a tax credit of up to 50 percent of their premium contribution.
- AHCA: The employer mandate will be eliminated, but the wellness incentives will remain intact. The tax credits for smaller employers will also be eliminated.
Essential health benefits and pre-existing conditions
- ACA: Requires all plans offered in the individual and small group markets to cover 10 essential health benefits including hospital care, prescription drugs and maternity care. Insurers can’t deny coverage based on pre-existing conditions or charge more based on an individual’s health history.
- AHCA: Essential health benefit requirement and pre-existing conditions policy would remain, however starting in 2020, states may apply for waivers to redefine essential health benefits for health insurance coverage offered in the individual or small group market. Starting in 2019, states would be allowed to waive the community rating requirement which prohibits insurers from charging sick people more than healthy individuals for the same insurance policy. States that waive this rule would be required to set up high-risk pools to help provide coverage for sick people.
Pricing regulations
- ACA: Requires insurers to set prices based on four factors: age (limited to 3 to 1 ratio), geographic rating area, family composition, and tobacco use (limited to 1.5 to 1 ratio).
- AHCA: The age rating would shift from 3:1 to 5:1 starting in 2018, unless states adopt a different ratio.
Dependent coverage until 26
- ACA: Children are allowed to remain on a parent’s insurance until the age of 26.
- AHCA: Remains intact.
Individual premium subsidies
- ACA: Income-based subsidies that can be used to lower monthly insurance payments when purchasing health insurance are given to people whose income is between 139 and 400 percent of the federal poverty level. The tax credit decreases as income increases, but would also be higher in regions where insurance prices are more costly. In order to receive a subsidy, plans must be purchased through the Health Insurance Marketplace (healthcare.gov).
- AHCA: Changes the way subsidies will be distributed using age, instead of income, as a way to calculate how much people will receive, starting in 2020. Tax credits would increase as recipients get older and phase out for individuals making more than $75,000 or families making more than $150,000. For a person under 30, the subsidy would be $2,000, and it would double for people 60 and over. The proposal also expands the type of health plans that qualify for subsidies. Additional funding would be set aside for tax credits to help older Americans between 50 and 64.
Cost-sharing reductions
- ACA: Tax credits are given to individuals who live within 100 and 250 percent of the federal poverty level. These tax credits are in place to help people pay for any out-of-pocket expenses associated with their health care such as deductibles and co-pays.
- AHCA: This would be eliminated in 2020.
Medicaid
- ACA: States are given the option to expand Medicaid coverage by raising the eligibility cutoff to 138 percent of the federal poverty level.
- AHCA: Prevent new states from opting in to the ACA’s Medicaid expansion. Current expansion states would receive 90 percent of enhanced federal funding as long as individuals remain eligible and enrolled in the program prior to Dec. 31, 2019. Starting in 2020, states would receive a set amount of money per enrollee, known as a per capita cap system. States would also be given the option to receive a lump-sum block grant for Medicaid, rather than per capita funding.
Health savings accounts
- ACA: Individuals are allowed to place $3,400, and families $6,750, in a tax-free health savings account, which they can use to pay for out-of-pocket medical expenses.
- AHCA: Starting in 2018, the maximum contribution an individual can make will be increased to $6,550. For families, they will be allowed to place $13,100 in a tax-free health savings account. Consumers would not be allowed to rollover excess tax credit money into a health savings account.
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