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ACA Replacement Plan Would Cap Tax-free Employer Contributions

06/23/16

  06:02:00 pm, by MedBen5   , 271 words,  
Categories: News, Health Care Reform, Taxes

ACA Replacement Plan Would Cap Tax-free Employer Contributions

Capitol building

Some six years after the introduction of federal health care reform, House Republicans have formally unveiled a replacement for a repealed Affordable Care Act, The New York Times reports. Speaker Paul Ryan (R-Wis.) said the plan would slow the growth of health spending and relax federal rules for health insurance, but did not provide a cost estimate or funding mechanism.

Of specific interest to employers, the proposed plan would place a cap on tax-free contributions to employee health coverage, as an alternative to the unpopular "Cadillac tax." House Republicans claim the cap would affect “only the most generous plans.” However, James P. Gelfand, senior vice president of the ERISA Industry Committee, counters that the tax would "threaten the employer-sponsored health insurance that so many Americans enjoy.”

The 37-page white paper does retain several of the ACA's more popular provisions, such as allowing young adults to keep coverage under their parents' health plan to age 26 and forbidding health insurers to charge individuals higher premiums for pre-existing conditions. But it would effectively eliminate federal insurance marketplaces and loosen rules that require Americans to carry health coverage.

Additionally, the plan would:

  • Promote the use of health savings accounts and other consumer-driven plans;
  • Allow for sales of insurance across state lines;
  • Offer a flat tax credit to each person or family in the individual insurance market;
  • Provide high-risk pools for individuals who have a break in coverage;
  • Gradually increase the eligibility age for Medicare to 67;
  • Give each state a fixed amount of money for each Medicaid beneficiary or a lump sum of federal money for all of a state’s Medicaid program;
  • Preserve employee wellness programs.

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