Society for Human Resource Management
The ERISA Industry CommitteeThe Only National Association Advocating Solely for the Employee Benefit and Compensation Interests of America’s Largest Employers1400 L S t reet , NW, Suite 350, W a s h in g t o n , DC 20005 ? (202) 789‐ 1400 ? w w w . e r i c . o r gERIC is the only national association that advocates exclusively for large employers on health, retirement,and compensation public policies at the federal, state, and local levels.Summary: Better Care Reconciliation Act of 2017Title I:Section 101: Elimination of Limitation on Recapture of Excess Premium Credits? Beginning in 2018, the federal government will attempt to collect the entirety of funds that were paidfor the purchase of individual market insurance plans that were later found to have exceeded theamount the taxpayer was eligible to receive.Section 102: Restrictions for Premium Tax Credits? Reduces credit eligibility from incomes of 400% of the federal poverty level (FPL) down to 350%? Tightens an exception allowing certain legal aliens to receive credits.? Changes credit amounts by tying them to the median‐cost plans in a market rather than the secondlowestsilver‐level plan. The new calculation is based on a plan with a 58% actuarial value, which underACA would be less than a bronze plan.? Redesigns the credits to be based on both age and income, with lower income and older taxpayersreceiving the largest credits.? Slows the indexing that allows credit amounts to increase over time.? Prevents individuals with an offer of employer‐sponsored health insurance from obtaining individualmarket credits, even if their share of the employer plan premiums would exceed 9.5% of their annualincome. This includes people who have small business HRAs.? Credits cannot be used for a plan that covers abortions, except in the case of rape, incest, or saving thelife of the mother.? Increases the penalty for wrongfully claiming a credit from 20% up to 25%.? Lowers the credits’ threshold in order to provide additional funds for states that did not expandMedicaid.? These credits can only be used on an exchange, meaning for the purchase of a qualified health plan(QHP).Section 103: Changes to Small Business Health Insurance Tax Credit? Effective 2020, ends the ACA’s small business health insurance tax credit. Starting in 2018, the creditsalso cannot be used to purchase a plan that covers abortion.Section 104: Individual Mandate? Beginning 2016, the penalty for individuals who do not maintain minimum essential coverage isreduced to zero.Section 105: Employer Mandate? Beginning 2016, the penalty for an applicable large employer that fails to offer minimum essentialcoverage to employees, or for an employer that has an employeeSection 106: State Stability and Innovation Program? Appropriates significant funds for states to make arrangements with insurance companies to preventcoverage and access disruption, For 2018 and 2019 $15 billion are appropriated per year, and for 2020and 2021 $10 billion each. The funds will flow through the Centers for Medicare and Medicaid Services(CMS).? There is both a short‐term program and a long‐term program. For the short‐term, insurers will need toapply for these funds through CMS, and states do not have to match the money.? The long‐term program sends the money to state governments. The states can use the funds on a highriskpool, a premium or plan offering stabilization program with insurers, a program that pays providersto reduce costs, or an out‐of‐pocket relief program. This is only for the states and DC, not for territoriesor other US‐owned locations. States only have to apply once, and if approved, the money can continueflowing through the end of 2026. The long‐term program is funded at $8 billion for 2019, $14 billion for2020 and 2021, $6 billion for 2022 and 2023, $5 billion for 2024, 2025, and 2026. That’s a total of $62billion.? Over time, states will have to match a portion of these funds. No match is required in 2019, 2020, or2021, but in 2022 states must match 7%, in 2023 the match is 14%, in 2024 it’s 21 percent, in 2025 it’s28%, and in 2026 it is 35%. If states misuse the funds, CMS can recover the money or withhold futurepayments.? These funds are tied to the Children’s Health Insurance Program (CHIP), which has a built‐in provisionthat prevents funds from being spent on abortion.Section 107: Better Care Reconciliation Implementation Fund? To carry out the repeal and replace bill, $500 million is appropriated to HHS.Section 108: Delay of the Cadillac Tax? Beginning in 2020, the “Cadillac” excise tax on high‐cost employer‐sponsored health insurance isrepealed. However, the repeal expires at the end of 2025. So this section in practice delays the Cadillactax until 2026.Section 109: Repeal of the Tax on Over‐the‐Counter Medications? Beginning 2017, funds from an HSA, MSA, FSA, or HRA can be used to purchase OTC medicationswithout a prescription, without incurring a penalty.Section 110: Repeal of Tax on Health Savings Accounts? Effective January 2017, the penalty for use of HSA funds for a nonqualified distribution is reduced from20% down to 10%. In the case of an MSA, it’s reduced from 20% down to 15%.Section 111: Repeal of Limitations on Contributions to FSAs? Beginning in 2018, the ACA’s $2,500 cap on Flexible Spending Arrangements (FSAs) is repealed.Section 112: Repeal of Tax on Prescription Medications? Beginning 2018, the tax on branded medications is repealed.Section 113: Repeal of Medical Device Tax? Beginning 2018, the medical device tax is repealed.Section 114: Repeal of the Health Insurance Tax? Effective 2018, the tax on fully‐insured health insurance plans is repealed.Section 115: Repeal of the Elimination of the Deduction for Expenses Allocable to Medicare Part D? Effective 2017, employers may once again deduct Medicare Part D subsidy as a business expense.Section 116: Repeal of Chronic Care Tax? Effective 2017, the income threshold for claiming the medical expense deduction reverts from theACA’s 10% back to 7.5% of income.Section 117: Repeal of Medicare Surtax? Effective 2023, the additional 0.9% surtax on individuals earning over $200,000 or married couplesearning $250,000 is repealed.Section 118: Repeal of Tanning Tax? Effective October 2017, the ACA’s 10% tax on tanning services is repealed.Section 119: Repeal of Net Investment Tax? Effective 2017, the ACA’s additional 3.8% tax on capital gains on individuals making $200,000, andmarried couples making $250,000 is repealed.Section 120: Repeal of Health Insurance Executive Compensation Tax? Effective 2017, insurance companies can again deduct the value of remuneration paid to officers,directors, and employees above $500,000.Section 121: HSA Contribution Limit Increase? Beginning in 2018, the contribution limit to an HSA is now equal to the maximum out‐of‐pocket costsfor an individual or family.Section 122: HSA Catch‐Up Contributions? Beginning in 2018, both spouses can make the $1,000 catch‐up contributions to the same HSA.Section 123: HSA Grace Period? Beginning in 2018, if an individual enrolls in a high deductible health plan, and establishes a HSA within60 days, they may be reimbursed from the HSA for medical expenses incurred in between the date theinsurance coverage begins and the establishment of the account.Section 124: Planned Parenthood Defunding? For a one year period (beginning on the enactment of the bill), an array of federal programs may notfund a “prohibited entity” – which is defined in such a way as to target Planned Parenthood.Section 125: Medicaid Presumptive Eligibility? Sunsets the ability of hospitals to automatically enroll people in Medicaid at the end of 2019. Also endsthe ability of some states to make presumptive eligibility determinations starting 2020 for theexpansion population or people making over 133% of FPL. Sunsets the so‐called “stairstep children” atthe end of 2019 as well.Section 126: Medicaid Expansion? Freezes the ability of states to expand Medicaid, starting March 1st 2017.? Winds down the Medicaid expansion in 2020.? For those states that did expand Medicaid, the expansion population will gradually have their federalmatch reduced to the state’s normal matching rate. In 2020 states will still get a 90% match, in 2021that will go down to 85%, in 2022 it’s 80%, in 2023 it’s 75%, and then it’s back to the rate that stateswould get for covering non‐expansion enrollees.? Starting in 2020, state Medicaid programs are no longer subject to essential health benefits (EHB)requirements.Section 127: Disproportionate Share Hospital Allotments? Increases DSH payments in states that did not expand Medicaid.Section 128: Reducing State Medicaid Costs? Reduces the amount of time that a Medicaid enrollee gets retroactive coverage from 3 months to 1month. This is effective on or after October 1, 2017.Section 129: Safety‐Net Funding for Non‐Expansion States? Again increases DSH payments for states that did not expand Medicaid, in both quantity and in thematching rates they get.Section 130: Eligibility Redeterminations? Starting October 1 of 2017, allows states to check every 6 months, or even more frequently, whetheran individual is still eligible for Medicaid coverage. Increases the funds a state may receive in order tocover their administrative costs of carrying this out.Section 131: Work Requirements in Medicaid? Gives states the option to require that non‐elderly, non‐disabled, non‐pregnant adults work in order toreceive Medicaid coverage. This cannot apply to a single parent with a child under 6 years old. Alsoincreases the federal matching for administrative costs to implement this.Section 132: Provider Taxes? Limits the ability of states to game the system and obtain Medicaid funds by taxing providers.Section 133: Medicaid Per‐Capita Allotment? Beginning in 2020, redesigns the Medicaid program into one in which states receive a set amount offunds based on categories of enrollee. Starting in 2024, the growth rate of federal Medicaid matchingfunds will be tied to a slower rate (CPI‐U, rather than the current use of medical inflation).? Specifically reduces federal funds to New York if the state requires local governments to fund thestate’s program.? There is a carve‐out for medically complex children, to prevent any adverse effects for them.Section 134: Medicaid Block Grant Option? Starting in 2020, states could elect to get a block grant for Medicaid rather than the per‐capitaallotment, but only for non‐elderly, non‐disabled adults. The block grant would last for 5 years, andthen the state would need to re‐apply.Section 135: Medicaid and CHIP Quality Performance Bonus Payments? States could receive bonus payments if they have lower medical costs and use these funds for qualityimprovement activity.Section 136: Grandfathering Certain Medicaid Waivers? Allows states to keep the managed care waivers they have already received, but if they make changesto the program they have to reapply for a new waiver. HHS would also “encourage” states to adoptwaivers that include home‐ and community‐based services.Section 137: Medicaid Rulemaking? Places additional requirements on HHS related to the promulgation of Medicaid regulations, such astaking and responding to more comments from state Medicaid directors in the rules’ preamblesections, including coordinating with their trade association(s).Section 138: Optional Assistance for Inpatient Psychiatric Services? Offers a 50% federal match for the costs of certain inpatient services to treat mental illness orsubstance abuse, starting in October of 2018.Section 139: Small Business Health Plans? Amends ERISA to create small business health plans (SBHPs), which will be treated as a group healthplan for the purposes of ERISA, the Public Health Service Act, and the Internal Revenue Code. Thissection is effective one year after enactment of the bill, and the Secretary of Labor has to have all theregulations done within 6 months of enactment.? A fully‐insured SBHP must get approval from the Department of Labor, and the sponsor of the planmust be an entity that was not established purely to provide health benefits. There cannot be aminimum group size required in order to join the SBHP. The Secretary would have 90 days to approveor deny an application, and then it would be deemed approved.? To join an SBHP, a business must either be the plan’s sponsor, a member of the sponsor, or anaffiliated member of the sponsor. There are safeguards to prevent the SBHP from shifting bad risk tothe individual market.? If an employer is eligible to join the SBHP, the sponsor must make available to them all the informationregarding coverage options under the SBHP – no cherry‐picking members.Title II:Section 201: Prevention and Public Health Fund? Defunds the Prevention and Public Health Fund starting in 2018.Section 202: Support for State Response to Opioid Crisis? Provides $2 billion in funding for HHS to give states to “support substance use disorder treatment andrecovery support services for individuals with mental or substance use disorders.” This money wouldbe for fiscal year 2018, and last until it runs out.Section 203: Community Health Center Program? Provides $422 million to the Community Health Center Fund for fiscal year 2017.Section 204: Individual Market Age Bands? Starting in 2020, the default limitation on how much premiums can vary by age will be expanded fromthe current 3:1 ration, instead to 5:1. This only applies to adults. States have the choice of using adifferent ratio, this is just the default.Section 205: Medical Loss Ratio? Starting in 2019 plan years, states can set their own medical loss ratios, governing how much aninsurance company can spend on claims versus on non‐claims or administrative costs. States can alsodetermine the amount that an insurance company will have to pay beneficiaries if it fails to meet theratio requirement.Section 206: 1332 Waivers? This section makes it easier for a state to obtain a waiver to transform their individual markets, aswaivers will now be approved by default unless HHS determines that the waiver would increase thefederal deficit. These provisions take effect upon enactment.? HHS would have $2 billion in grant funds to provide assistance to states to develop 1332 waivers. Themoney would be available fiscal years 2017 through 2019.? The default length of time that a 1332 waiver will be in effect is 8 years, unless the state wants thewaiver to expire sooner.? In addition to the other funds that can be rolled into a 1332 waiver, money from the Long‐Term StateStability Fund could be included as well.Section 207: Funding for Cost‐Sharing Reductions? Provides HHS with the funding for cost‐sharing reduction payments through the end of 2019.Section 208: Repeal of Cost‐Sharing Reduction Program? Effective for plan years beginning after December 31 of 2019, the CSR program is eliminated. ................
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