Potential impact of the Better Care Reconciliation Act (BCRA) on employer health plans

June 27, 2017 Christy Lukes

Last Thursday, the U.S. Senate released an initial “discussion draft” of The Better Care Reconciliation Act of 2017 (BCRA), making public their proposed amendments to The American Health Care Act (AHCA) passed by the House of Representatives in early May. The vote has already been delayed until after the July 4th recess, indicating that many changes are expected before it could eventually pass the Senate. We’re committed to keeping you informed about the potential impacts this legislation would have on your organization and your people.

This summary will help you anticipate potential impacts of this latest legislative development and determine what steps you should be taking now as we, together, navigate our way through this period of uncertainty (and, in some cases, potential opportunity) for employer health plans.

The Better Care Reconciliation Act of 2017

Like the AHCA, the BCRA is not a full “repeal” of the Affordable Care Act (ACA). Rather, the BCRA makes changes to various standards and revenue related provisions within the existing ACA framework. There are still a number of steps to go through before this proposed legislation could become law. If the BRCA passes through the Senate, it would return to the House for further proceedings and another vote before it could ultimately reach the President’s desk to be signed into law.

The currently drafted BCRA maintains the following provisions of the AHCA:

  • The amount of the employer mandate penalty would be retroactively reduced to $0.00 for all periods starting with January 2016. However, 2015 penalties may still be assessed.
  • “Cadillac Tax” delayed until 2026.
  • Increased HSA contribution limit.
  • Elimination of the FSA contribution limit.
  • Elimination of ACA taxes including those applicable to higher income individuals, medical devices, health insurance, etc.
  • Significant changes to Medicaid funding.
  • State permission to apply to waive the otherwise applicable essential health benefits requirements for policies issued in their state.

Draft BCRA provisions that differ from the AHCA include:

  • Simplified IRS Section 6055/6056 employer reporting of MEC is not included. Though extremely important for employers, it may have been omitted from the BCRA in order to comply with certain Senate procedure rules. We expect to see it proposed again (maybe in another bill, and will be sure to note any status change in our next update).
  • Continuous coverage provisions that would allow insurance carriers to charge higher premiums to individuals with significant breaks in coverage are not included.
  • An income-based healthcare tax credit, similar to the current ACA tax credit, instead of the age-based tax credit outlined in the AHCA.
  • Temporary funding through 2019 for cost-sharing reductions (CSR)s paid to insurance carriers for certain low-income individuals with coverage in the marketplaces.
  • Premium tax credits based on bronze level tier of coverage instead of the silver tier currently used under ACA guidelines.

Next Steps

Until the President signs any legislation into law, the ACA continues to be the law of the land, and you should continue to operate with full ACA compliance in mind. This includes:

  • Submit PCORI fee payments for self-insured covered individuals via IRS Form 720 by July 31, 2017.
  • Ensure all Summary of Benefits and Coverage statements are updated to meet new template standards by your next open enrollment.
  • Continue compliance with the ACA’s employer mandate, including offering full-time employees coverage that meets the MEC, minimum value, and affordability requirements.
  • Prepare for 2017 IRS Section 6055/6056 reporting and filing.

Amidst the media swirl, you may be faced with employee questions and we know it can be challenging to navigate how much information to share. At this time, given the daily changes and uncertainty facing the BCRA’s future, we find it helpful to focus most employees on the known, current ACA requirements both for employers and individuals.

As HR and Benefits leaders, however, you may want to start considering possible plan impacts (e.g., design, administration, eligibility, etc.) and thinking about a communication strategy for changes that may eventually emerge. Alight is committed to monitoring developments in Washington and will provide you with updates as these potentially significant events unfold.

Previous Article
Alight Solutions 401(k) Index™: June 2017 Observations
Alight Solutions 401(k) Index™: June 2017 Observations

Alight Solutions 401(k) Index™ tracks trading activity among defined contribution plan investors. This repo...

Next Item
Benchmarking 401(k) rollover behavior
Benchmarking 401(k) rollover behavior

Four fundamental questions plan sponsors should consider as they contemplate the role they play in monitori...