News Alerts

How Does the American Health Care Act Impact Me? Obamacare Lite?

That depends on how and where you obtain your health insurance. Or if you purchase health insurance. This bill is shorter than Obamacare (so far, anyway) 166+ pages versus 2000+ pages, but there will be some significant impact on individuals and business owners.

First, let’s see what the Act retains that will benefit individuals. One of the most important components of the ACA is the pre-existing condition policy. Insurers will continue to be required to cover people regardless of pre-existing medical conditions in addition to barring the companies from charging more based on health history. Also being kept: the provision that children can stay on their parents health insurance policies until age 26. The requirement that all insurers offer ten essential health benefits including maternity care and preventative services will stay in effect. The American Health Care Act will continue the prohibitions on annual and lifetime limits; insurers can’t set a limit on how much they pay to cover an individual.

What has garnered the most attention for individuals is the repeal of the individual mandate. This will mean that people who go without health insurance will no longer have to pay a penalty. A possible downside to this change is that healthy, younger people may go without health care which can drive the price up for sick individuals who do seek coverage. To offset this possibility, the plan proposes a “continuous coverage incentive” designed to charge individuals a 30 percent penalty for lapses in health insurance coverage.

The employer mandate, the requirement that larger companies must provide affordable insurance to their employees or face financial penalties, is part of the repeal section. Not repealed but postponed: the Cadillac tax (40 percent excise tax on plans where premiums are $10,200 for individuals or $27,500 for families annually) scheduled for 2020, now 2025.

Premium subsidies will change, too. Subsidies will be distributed by using age, instead of income as a way to calculate how much individuals will receive. Subsidies for out-of-pocket expenses, also known as cost-sharing subsidies provided by the federal government under the ACA to assist some people pay deductibles and co-payments will be repealed in 2020.

Older individuals may see an increase in their premiums. Under the ACA, health insurance plans could only charge older participants three times what they charged the youngest participants. Under the proposed legislation, insurers would be allowed to charger older participants five times as much as younger participants.

A key benefit for individuals and families is the proposed expansion of Health Savings Accounts. An important savings vehicle for participants in high deductible plans, under current law, in 2017, an individual can contribute $3,400 and a family $6,759 on a tax deductible basis to Health Saving Account. The American Health Care Act would allow substantial increases in contributions to these accounts. Beginning in 2018, the basis limit will be at least $6,550 for an individual and $13,100 for a family. Spouses will be permitted additional contributions.


Certainly, there will be more to come. Stay tuned.