How Will the American Health Care Act Affect My Business?

March, 19 2017

This month, Republican leaders in Washington D.C. released the American Health Care Act to replace the Affordable Care Act (ACA), also known as Obamacare. This is one of the first things President Donald Trump said he was going to do once in office. But how different is this new plan? My clients want to know how this new plan will affect their business and what they have to do to comply with any changes.

The first thing you have to know is that the American Health Care Act is a replacement plan just released by House Republicans. The bill first has to pass a vote in both the House and the Senate, then it has to be signed by the President before it becomes a law. So for now, business owners just need to tune into the news to find out the results. In the meantime, here are some things you should know about the new, alternative health care plan:

  • NO TAX PENALTIES– Under Obamacare, unless you specifically fell under an exemption, you would have to either sign up and pay for health insurance or pay a tax penalty for not having insurance. The American Health Care bill eliminates any tax penalties imposed on nonexempt individuals for any months after December 31, 2015. It would also end small-business tax credits in 2020. But since this act is still a bill, you will still be subject to the penalty (if you don’t have insurance) when filing your 2016 tax return, unless Congress passes the act by the April 17th tax deadline.
  • EMPLOYER RESPONSIBILITY – Currently, employers with 50 or more full-time employees must offer health insurance to their workers, or else, pay the penalty. As a result, many companies started laying off full-time employees or cutting their hours. Small business owners said the mandate hurt. Under this Republican plan, the employer requirement is not part of the plan.
  • PRE-EXISTING CONDITIONS – Under both Obamacare and this new plan, insurers must offer coverage to everyone and cannot deny it based on a pre-existing health condition or poor health. Under the GOP plan, insurers can charge 30% higher premiums for one year to those who didn’t have previous health coverage, no matter their health condition. That means if you didn’t have coverage for 63 days or more over the last 12 months, then you could see a higher premium.
  • INDIVIDUAL SUBSIDIES – The big key difference between the new plan and the current ACA is that the GOP plan would eliminate cost-sharing subsidies for anyone earning between 100-250% of the federal poverty level. Premium tax credits would change too. Instead of a sliding scale based on a person’s income, tax credits under the Republican plan are based on age, with older Americans getting more tax credits. However, the plan also allows insurers to charge older Americans up to five times more than a younger person.
  • HEALTH SAVINGS ACCOUNTS – The new GOP plan increases the contribution limits you can make into your tax-exempt health savings account or accounts. The number for individuals goes from $3,400 to $6,550. For families, the number jumps from $6,750 to $13,100.

There’s no guarantee that the American Health Care Act is going to become law. In fact, there’s a lot of dissent and discussion among Republicans if this newly proposed bill will do enough to fix our country’s broken health care system. We’ll have to wait to see the outcome.