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On March 24, House Speaker Paul Ryan pulled the American Health Care Act (AHCA) ‒ the vaunted replacement to Obamacare ‒ from the floor, lacking the votes to pass the bill. So what happens next? And what can employers do to let their voices be heard?
At the moment, it's difficult to say whether Ryan and the House GOP will regroup and attempt to come up with a more acceptable plan down the road, or just concede defeat and let the Affordable Care Act (ACA) run through its paces and see what happens. Of course, Republicans and Democrats could somehow work through their differences and come up with a solution that's mutually acceptable... though at this point that sounds more like a fairy tale than a realistic scenario.
What is safe to expect is that for the time being, the ACA will remain the law of the land. Even if Congressional Republicans and President Trump could pass a bill in record time, nothing would change until 2018 at the earliest. So for now, it's business as usual.
As we watch developments unfold in the coming weeks, it's important to keep in mind that while the AHCA focused primarily on changes to individual health coverage, it also addressed employer-sponsored plans, albeit to a lesser degree. As noted in a recent article, we were surprised that the AHCA did not eliminate or cap the tax deductibility of group health coverage, instead merely postponing the Cadillac tax until 2026 (or more likely, never). But now that the AHCA is no more, the possibility still exists that a provision to eliminate this benefit could resurface in future legislation.
The employer exclusion tax benefit (Internal Revenue Code (IRC) Section 106) makes employer-sponsored health coverage a valuable benefit for workers and a valuable tool for employers to attract, hire and retain top talent. Eliminating this employer tax exclusion would, in turn, eliminate most of the advantages of employer-sponsored group health coverage, while capping it would degrade the benefit of plan coverage for employees.
Even though the future of "repeal and replace" is cloudy at the moment, MedBen believes in remaining proactive. For that reason, we are urging our Senators and Representatives to maintain the system that has worked for Americans for decades, and to preserve the tax incentives for employer-sponsored group health coverage by leaving IRC Section 106 in place, without modification. And we urge you to do the same.
One thing that we can say with certainty: Whatever the outcome of health care reform, MedBen is here to answer client questions and assist in any way we can. You are welcome to contact Vice President of Compliance Caroline Fraker at 800-851-0907 or email@example.com.