Republican Senators released a draft of a health care bill that would repeal many of the tax provisions of the Affordable Care Act. This bill will be changed and amended if and/or when it becomes law.
This list is from the Journal of Accountancy, 6/22/2017.
• The bill would eliminate the limitation on recapture of the advance premium credits. So we are basically still offering exchanges to buy insurance. This was not repealed.
• It would limit the eligibility for the premium tax credit to taxpayers whose income does not exceed 350% of the poverty line instead of the current 400%.
• It would eliminate the health insurance mandate.
• It would eliminate the employer mandate. This is great news for small employers who could no longer afford to give their employees raises because the cost of insurance premiums were so high. Hopefully, the cost of insurance will stop doubling every year and small employers can again provide health insurance coverage for their employees without a mandate.
• It would temporarily eliminate the “Cadillac” tax on high-cost employer-sponsored health insurance plans. This tax never went into effect under Obama Care. Remember there is no limit on what an employer can spend on health insurance for an employee and still get a deduction.
• It would allow you to use an HSA, MSA, or FSA to pay for over-the-counter medicines, not just prescriptions. Wow, not sure how that would work. Hmmm.
• The penalty on distributions from HSAs or MSAs for non-medical expenses would be reduced.
• The annual fees imposed on pharmaceutical manufacturers and importers and health insurance providers would be repealed.
• The income threshold for itemizing medical expenses would revert back to 7.5% from 10%.
• The 0.9% Medicare surtax would be repealed.
• The 3.8% net investment income tax would be repealed.
• The 10% excise tax for indoor tanning services would be repealed. How did this ever get in ObamaCare in the first place?
• For HSAs:
o The contribution limit would be equal to the amount of the deductible and out-of-pocket
expenses for high-deductible health plans.
o Married taxpayers would both be allowed catch-up contributions to the same HSA.
o An HSA established within 60 days of the start of coverage under the HDHP plan would be treated as having been established on the date coverage under the health plan begins, allowing medical expenses incurred before the establishment of the HSA to be treated as qualified medical expenses.
There are many different dates as to when these provisions would be effective; some effective this year and some not effective until later years up to 2022.
It will be interesting to see how much of these tax cuts make it to the final bill. And also, the report from the CBO regarding who will be effected, how much tax revenue will be lost, how many more people will choose to be uninsured, etc.
This bill seems to appeal to the majority of Republicans but does not repeal ObamaCare, which causes some concerns among Republicans with campaign promises to eliminate the health care exchanges. I think that this is not included in the bill because over time the exchanges will be eliminated through attrition with no carriers providing insurance through the exchanges.
As always these days, it should be interesting.
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