It’s hard to keep up with all the health care legislation news lately. That’s why we’re providing regular summaries of the latest news, reflecting the current state of health care in the United States or how it may be changing in the not-too-distant future. Here’s a recap of some of this week’s stories:
President Trump Shares Vision for Healthcare Reform with Congress and the Nation
In a joint address to Congress, President Trump reaffirmed his commitment to repeal and replace the Affordable Care Act. The President said that Congress should institute “reforms that expand choice, increase access, lower costs, and, at the same time, provide better healthcare.”
The President then outlined five principles that should guide Congress in their legislative efforts:
- Protect access to insurance for those individuals affected by pre-existing conditions and ensure a smooth transition for all individuals who are currently enrolled in insurance through the healthcare exchanges;
- Expand use of Health Savings Accounts and implement tax credits to allow consumers to buy the health insurance plans that they want from the free market;
- Put Medicaid in the hands of the States to allow governors to tailor the program to their populations;
- Lower the cost of healthcare through legal reforms that protect patients and physicians including legislation to lower the cost of prescription drugs; and
- Create a competitive national insurance market by allowing the purchase of insurance across state lines.
The goals outlined in President Trump’s speech reflect many of the proposals currently circulating in Congress and the principles which served as the foundation of, Secretary Tom Price’s previous legislation to repeal and replace the ACA.
Draft Legislation Indicates that HSA Improvements will be Part of Repeal and Replace
The public peeked inside the backrooms of Capitol Hill last Friday when the House Republican Leadership’s draft healthcare bill was leaked to the Press.
The proposed legislation is in line with the principles outlined in President Trump’s speech and repeal the ACA and replace it with refundable tax credits for the purchase of insurance, create high-risk pools for those with pre-existing conditions, and return Medicaid to the States.
The bill also includes several improvements to existing HSA laws including:
- Increasing the contribution limit to the out of pocket maximum ($6,550 for individuals, $13,100 for families in 2017);
- Allowing HSA-eligible spouses to make catch-up contributions to a single account;
- Providing 60-day grace period to allow reimbursable expenses during that period;
- Making over-the-counter medications qualified medical expenses for all CDHPs;
- Allowing refunded portion of health insurance tax credit to be contributed to HSA; and
- Reducing the tax penalty on ineligible expenses from 20% to 10%.
While the bill proposes a tax on employer sponsored plans which are more generous than 90% of the employer plans offered nationally, contributions to HSAs would not be included in that calculation.
Senate and Congressional Republicans Internally Debate Repeal and Replace Specifics
While Senate and Congressional Republicans are largely unified behind the principles outlined by President Trump in his address, opinions and proposals abound on how best to accomplish them. After the draft of the House Republican Leadership’s bill was leaked, the infighting amongst legislators bubbled to the surface. Several Senate and House Republicans say that they will not vote for the draft bill.
This dissention is based largely on the refundable tax credit to individuals and the changes to the employee tax exclusion. Conservative members of the House and Senate believe that the refundable credit is an entitlement and will not vote to support it on ideological grounds.
House Leadership called a meeting to address Republican Senators and sell them on their plan, but reports say that Senators have not coalesced around the House proposals and want more detail before commenting. Despite the current mood, House and Senate Leadership say that a repeal and replace bill should pass the House by late March or early April and the Senate shortly thereafter.
DOL Fiduciary Rule Delayed until June
The Federal Register published a notice from the Department of Labor seeking comment on delay of the applicability date of the Fiduciary Rule from April 10, 2017 until June 9, 2017. The comment period is likely a mere procedural step towards an almost certain delay.
This delay will allow the Department to comply with President Trump’s executive memorandum directing the department to consider the effect of the Rule on individual investors and the financial industry. The Department will be accepting comments on the impact of the rule until April 16.
IRS Extends Period for Furnishing Initial QSEHRA Notice
The IRS extended the period for employers to furnish an initial notice to eligible employees regarding a qualified small employer health reimbursement arrangement (QSEHRA). QSEHRAs are a new type of stand-alone HRA permitted under legislation passed in 2016. Unlike other HRAs, QSEHRAs are not considered “group health plans” for most purposes under the Code, ERISA, and the Public Health Service Act (PHSA), and they can only be offered by employers that do not offer group health plans and are not applicable large employers as defined in Code § 4980H.
Employers offering QSEHRAs generally must furnish an annual written notice to eligible employees at least 90 days before the start of the year, by the employee’s initial eligibility date (if that date is after the first day of the year), or within 90 days after the legislation’s enactment, whichever is latest.
The notice must include the maximum amount that the QSEHRA can distribute for the year (called the employee’s “permitted benefit”) and other specified information.
The IRS has now announced that employers offering QSEHRAs for a year beginning in 2017 are not required to furnish the initial notice to eligible employees until further guidance is issued regarding the notice’s content. The guidance will include a deadline for providing the initial notice that is at least 90 days after the guidance is issued.