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ACA Repeal Could Take Years

There’s a lot of talk – and, perhaps, even more being written – about President-elect Donald Trump’s plan to work with the new Republican-controlled Congress in 2017 to repeal the Affordable Care Act (ACA). Some members of Congress have said it will be their first legislation action taken in the new year; however, there are multiple strategies being discussed and Sen. Majority Leader Mitch McConnell (R-Kentucky) told Reuters news service in December that he is unwilling to commit to a repeal timeline. McConnell was quoted as saying, “We will work expeditiously to come up with a better program than the current law, because the current law is simply unacceptable and not sustainable.” The U.S. House of Representatives and U.S. Senate will go to work on January 3, 2017, with the new president to be sworn in more than two weeks later on January 20. Nevertheless, there are some – both inside and outside of Washington – who believe a full repeal is unlikely. Even President-elect Trump admits there are provisions of the health care law that are attractive and popular. Those include coverage for pre-existing conditions and the ability of parents to keep a child on their health plan until age 26. Throughout this most-recent election cycle, many critics of the ACA blamed the run-up in the costs of health care on health care reform.

Rising Health Care Costs

The reality is health care costs have been rising for years – both before and after the implementation of the ACA. Rising premium and deductible costs are a reflection of escalating health care prices. Don Berwick, former administrator for the Centers for Medicare & Medicaid Services (CMS), told Kaiser Health News that if the House and Senate had the votes, they could repeal the ACA tomorrow, but health care costs would continue to go up. In fact, as reported by the Los Angeles Times in September, health care costs this year saw the highest month to month increase in more than three decades. The overall price of health care increased by one percent in August, the largest monthly increase since 1984. “If that 1% rate was sustained each month,” Geoffrey Joyce, director at the University of Southern California’s Schaeffer Center for Health Policy and Economics told the Times, “you’d see 12% growth for the entire year, and that would be very concerning.” Senate Majority Whip John Cornyn (R-Texas) told Politico that upending the entire health care system for those currently enrolled in coverage through the federal and state health exchanges is not expected. “We talking about a three-year transition now that we actually have a president who’s likely to sign the repeal into law.

People are being, understandably cautious, to make sure nobody’s dropped through the cracks.” House Majority Leader Kevin McCarthy (R-California) expects reality to set in and some negotiation on health care law changes to follow. He told Politico, “I think once it’s repealed, you will have, hopefully, fewer people playing politics and coming together to try to find the best policy.” Once a repeal vote is taken, insurers could decide to leave the healthcare.gov marketplace right away, which could further complicate coverage for hundreds of thousands or even millions who are currently insured. Some insurers operate in many markets across the country, while others serve only a single state or a few states. Your CaliforniaChoice broker can help you stay up to date on what’s changing – and what’s likely to stay the same – with the ACA. If you don’t have a broker, we can help you find one.

Health Care Tax Credit for Small Businesses

Employers may be eligible for a Small Business Health Care Tax Credit if the organization has fewer than 25 full-time equivalent employees, the average wages paid to employees are less than $50,000 (adjusted for inflation beginning in 2014), and it pays a uniform percentage of the premium for all employees that is equal to at least 50 percent of the cost of employee-only coverage. The tax credit is available for to eligible employers for two consecutive tax years. Part-time employees count as a fraction of a full-time equivalent employee (for example, two half-time employees equal one full-time equivalent employee for purposes of the credit).

For tax years beginning in 2014 or later, to qualify for the credit, an employer generally must contribute toward premiums on behalf of each employee enrolled in a qualified health plan (QHP) offered by the eligible employer through a Small Business Health Options Program (SHOP) established as part of the Affordable Care Act. (In California, the SHOP Exchange or SHOP Marketplace is known as Covered California for Small Business and it offers coverage to groups with up to 100 employees; in many other states, SHOP coverage is available only to groups with up to 50 employees. Covered California offers coverage from two statewide health plans and three regional health plans in its SHOP.)

Even a tax-exempt enterprise – as described in section 501(c) of the Internal Revenue Code (IRC) and exempt from tax under section 501(a) of the IRC – may qualify for a small business health care tax credit. The credit is refundable for tax-exempt businesses, but it is limited to the amount of the tax-exempt employer’s payroll taxes withheld during the calendar year. For-profit employers can use IRS Form 8921 to get up a tax credit of up to 50 percent of their contributions to employee premiums for health insurance. Non-profit employers can get a tax credit of up to 35 percent of their premium contributions for employee health coverage.

2017 SHOP Marketplace Changes

The SHOP marketplace is introducing a new feature for 2017. Employers can choose a single health plan for all employees or select a plan “category” and give employees the option to select a plan from any insurance company offering plans in that category. In this way, the public exchanges in more than 20 stats will offer a benefit similar to what the CaliforniaChoice private health insurance has offered for two decades and what the Covered California exchange currently offers.

The states expanding coverage to employers for 2017 include Alaska, Delaware, Florida, Georgia, Illinois, Iowa, Kansas, Kentucky, Louisiana, Maine, Missouri, Montana, Nevada, New Hampshire, North Dakota, Ohio, Oklahoma, Texas, Virginia, Wisconsin, and Wyoming. If you want to know more about the CaliforniaChoice exchange or Covered California for Small Business, contact your employee benefits broker. If you don’t have a broker, we’ll help you find one to speak with about your employees’ health insurance needs.