The American Health Care Act of 2017 (AHCA) was passed by the U.S. House of Representatives on May 4, 2017. Designed as an Obamacare replacement bill, the AHCA is set to change many healthcare laws put into place under the Obama administration. The chart below shows how your coverage may change with the American Health Care Act vs. Obamacare, if the AHCA is passed by the Senate and signed into law by the President. You can also read an American Health Care Act analysis, which compares the AHCA to America’s Bill, a crowdsourced healthcare reform bill that’s compiled by OurCareBill.org.

Obamacare (formally called the Affordable Care Act or ACA) The American Health Care Act of 2017 (AHCA)
Cost-Sharing Reduction Subsidies Cost-sharing reduction subsidies provide tax credits in order to lower out-of-pocket health insurance expenses for individuals (like copays and deductibles). The AHCA would repeal these subsidies in 2020.
Premium Subsidies Income-based subsidies are available to individuals through the Marketplace. Eligible individuals have incomes between 100% and 400% of the federal poverty level. Refundable tax credits would be available annually to individuals based on their age:

  • Under 30: $2,000
  • 30-39: $2,500
  • 40-49: $3,000
  • 50-59: $3,500
  • Over 60: $4,000

The refundable tax credit decreases for individuals with higher incomes and has a family limit.

Eligibility for refundable tax credits is limited to individual plans and certain COBRA coverage. People who can receive group (employer), Medicare, or Medicaid coverage are not eligible.

Individual Mandate Americans must enroll in qualified health coverage or pay a tax penalty. Individuals can apply for coverage exemptions. The AHCA would reduce the individual mandate’s penalty to $0.

It would create a 30% premium surcharge for individuals who do not have continuous coverage for more than 2 months.

Employer Mandate Obamacare requires all employers with 50 or more full-time employees to offer qualified health coverage. If they do not, they must pay a tax penalty. The AHCA would reduce the employer mandate’s penalty to $0.
Essential Health Benefits All qualified health insurance plans must offer 10 essential health benefits. The AHCA would allow states to apply for coverage waivers and create their own benefit requirements.
Pre-existing Conditions The ACA does not allow insurance companies to deny coverage to individuals with pre-existing conditions. Companies are also prohibited from charging individuals with pre-existing conditions more for coverage. The AHCA would allow states to apply for pre-existing coverage waivers, which would allow for health status underwriting for individuals who do not maintain continuous coverage.

Companies in states that have a waiver would be allowed to charge people with pre-existing conditions more for their coverage if they lack coverage for more than 63 days.

States that obtain a waiver would have to set up a program (high-risk pool) to help individuals with pre-existing conditions get coverage.

Age Rating Limits the amount insurance companies can charge older Americans to 3 times what they charge younger enrollees. The AHCA would allow insurance companies to charge older Americans up to 5 times what they charge younger enrollees.

States could apply for waivers to increase this ratio.

Medicaid Allows states to expand their Medicaid programs with federal funding. The AHCA would discontinue the ACA’s expansion in 2020.

States could continue their expansions, but they would receive less federal funding.

States could add work requirements for certain individuals in order for them to receive Medicaid.

It also would reorganize the funding system into a per capita model.

Health Savings Accounts (HSAs) Leaves 2003 rules established by the Medicare Modernization Act in place:

  • Individual max contribution: $3,400
  • Family max contribution: $6,750
  • 20% tax penalty on non-qualified distributions
  • Only prescribed medications can be purchased with an HSA
The AHCA would modify rules for HSAs:

  • Individual max contribution: $6,550
  • Family max contribution: $13,100
  • Spouses could make catch-up contributions to the same HSA
  • 10% tax penalty on non-qualified distributions
  • Prescribed and over-the-counter medications could be purchased with an HSA
Taxes and Fees Implemented a number of taxes and fees on insurance companies, drug manufacturers, medical instrument manufacturers, net investment income, and employer-based coverage that was more expensive (“Cadillac tax”). The AHCA would delay the Cadillac tax, possibly until 2026.

It would eliminate taxes and fees placed on insurance companies, drug manufacturers, medical instrument manufacturers, and net investment income.

It would repeal the Medicare payroll tax increase as of 2023.

Group Health Plan Premiums and Taxes Currently, the premiums from your employer-based coverage are excluded from your taxable income. Your employer is required to report your premium costs on W-2 forms. The AHCA would not limit the employee tax benefit for job-based coverage. Your employer would still have to report the cost of your coverage on W-2 forms, and the bill would add a new field for each month you are eligible for your employer’s coverage.

Want to stay up to date on what’s happening with the American Health Care Act vs. Obamacare and other healthcare news? Visit our Healthcare Reform News Updates page.

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References

https://www.ciab.com/wp-content/uploads/2017/05/AHCAvsACA_050417.pdf

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