What agents need to know about the ACA

Written by Jessica Adkins

March 14, 2017

As the repeal, replace, or reboot of the ACA continues to be outlined and argued, House Speaker Paul Ryan has given a PowerPoint presentation and members of two committees have held epic overnight markup sessions as they continue to push the House Republican’s leadership proposal through the House of Representatives and the Senate.

While Republicans are keeping up the momentum in the face of growing opposition, it’s important to remember the effort seen on the bill is only the beginning stages of a very long process.

What does this mean for you, as an agent?

You clients will still need health insurance of some type: individual ACA coverage, small group coverage, short-term medical coverage, minimum essential health plan coverage, or other alternatives.

In the first step of the repeal process:

  1. The individual mandate requiring people to buy insurance or pay a penalty will be removed.
  2. Subsidies based on income/cost of coverage will be replaced by refundable tax credits based on age with an income cap*
  3. Taxes that ACA had imposed on the wealthy, insurers and prescription drug manufacturers will be removed.
  4. Extra Medicaid expansion funding will no longer exist; this will remove any enhanced funding states would receive for the low-income populations*
  5. Coverage protections will remain for those with pre-existing conditions
  6. Adult children will continue to stay on their parents’ plans until the age of 26
  7. The Cadillac tax, a 40% excise tax on employer health plans that are considered generous will be in effect*

*Scheduled to start in 2020, according to CNN.com Politics and in the most recent proposal highlights

In the Repeal-Plus plan, which seeks to repeal all allowable via the budget rules and includes some elements of replacement allowed by the budget rules and the parliamentarian’s interpretation of them. This strategy allows to provide the promise of the repeal, with enough elements of replacement to keep a sustainable marketplace, according to Ryan.

During this first phase, the repeal-plus would need 51 votes in the Senate and 216 votes in the House to pass. This figure is based on 430 members of the House due to five current vacancies in the chamber.

Moving on to replacement:

The repeal of the individual mandate would be considered a huge victory for some; removing the tax penalty to those without coverage and opening up the sales pool for opportunities to enroll your clients in short-term medical, telemedicine and other type of plans, however, it does not address the replacement of essential health coverage.

Some of the replacement provisions that have been introduced include:

  • Allowing insurers to sell coverage plans across state lines
  • Let people band together and get coverage in association health plans
  • Remove requirement that insurers cover 10 specific benefits, such as maternity

This is where things get even more difficult. To completely replace the ACA, Republicans must pick up 8 Democratic votes in the Senate, but the GOP can lose 21 House members and still pass the bill. This number is based on the 420 members of the House due to five current vacancies in the chamber. The number of representatives won’t change, however, their party breakdown might.

In full, it’s a multi-step, multi-bill, multi-year process. The current American Health Care Act bill only requires 50 votes in the Senate (and a tie-break by Vice President Pence). Subsequent bills require 60.

As we continue down this road of repeal, replace, or reboot–it’s important to keep your clients informed. The ACA is currently in effect and until otherwise noted, your clients need credible coverage or will otherwise pay a penalty. For a more detailed conversation on how to assist your clients during this confusing time, contact one of our ACA and Individual Health Insurance Specialists at 800-962-4693.

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