Frankly, in my opinion, all of the controversy yesterday, March 7, 2017, over the American Health Care Act is simply A LOT MORE Washington Theatrics.
Yes, there are Refundable Tax Credits, which die hard conservatives disagree with, but how else are folks that cannot afford health insurance supposed to purchase it? And there are some other provisions which I can understand conservative backlash and lend credibility to liberal claims that this is a way to give fat cats more tax benefits.: *40% tax on “Cadillac Plans” pushed out to 2025; * reduction of 20% O-Care Tax on withdrawals from Health Savings Accounts not used for health needs; *repealing the O-Care limitation paid to an officer, director or employer; however, this appears to be a darn good start.
I have read the bill, all 123 PDF pages of it (I NEVER could have got through O-Care’s 1,000+ pages), posted right on the internet. My “bullet point” synopsis is below.
Section – 01: For tax years 2018 & 2019, the O-Care requirement that any families exceeding 400% of fed poverty level return any overpaid premium tax credits remain in place.
Section – 02: Eliminates requirements that certain insurance be included in plans issued through exchanges, allowing premium tax credits for “catastrophic-only” coverage. Section also prohibits premium tax credits from being used to purchase plans that offer elective abortion coverage.
Section – 03: Repeals O-Care’s premium tax credit beginning in tax year 2020, appearing to allow a bridge for families to move from the old to the new.
Section – 04: Also moves the repeal O-Care’s Small Business Tax Credit out to 2020; however, between tax years 2018 & 2020, prohibits small business tax credits to be used for plans including elective abortions.
Section – 05: Repeals Individual Mandate, beginning 01/01/2016.
Section – 06: Repeals Employer Mandate,beginning 01/01/2016.
Section – 07: Moves the “Cadillac Tax” (40% tax on high-cost employer-sponsored health coverage) out from 01/01/2019 to 01/01/2025, in essence preserving the ability of employers to provide “premium coverage” for high-cost employer sponsored health coverage without penalty until 01/01/2025. I understand how this can be a BIG PROBLEM for conservatives and a claim of a “Fat Cat” benefit by liberals.
Section – 08: Repeals the O-Care tax on over-the-counter medications, effective tax year 2018.
Section – 09: Taxes are paid on withdrawals from Health Savings Accounts that are not used for health care needs. O-Care raised the tax to 20%. Section – 09 reduces the rate back to pre-O-Care rates. Again, I can see this as a problem, both for conservatives and liberals.
Section – 10: Repeals O-Care limitations on contributions made to Flexible Health Savings Accounts, effective 01/01/2018.
Section – 11: Repeals the O-Care 2.3% Medical Devise Tax, effective 01/01/2018.
Section – 12: Reinstates the business-expense deduction for employers that provide retiree subsidies for prescription drug coverage, effective 01/01/2018.
Section – 13: Folks that itemize expenses for tax purposes as opposed to using the Standard Deduction can only deduct amounts of medical expenses that exceed a certain percent of Adjusted Gross Income. Section – 13 reduces the percent from the O-Care 10% back to pre-O-Care threshold of 7.5%.
Section – 14: Repeals the additional 0.9% Medicare tax effective 01/01/2018.
Section – 15: Creates Refundable Tax Credits (payable by the government whether you owe tax or not – an “entitlement”) for the purchase of state-approved, major medical insurance and unsubsidized COBRA coverage, which are adjusted by age:
> Under Age 30: $2,000
> 30 to 39: $2,500
> 40 to 49: $3,000
> 50 to 59: $3,500
Over age 60: $4,000
The credits are “additive” for a family (each member can get a credit), capped at $14,000/family, indexed annually at the Consumer Price Index + 1, available up to single filing income of $75,000, joint $150,000. The credits phase out by $100 for every $1,000 in income over the thresholds.
Section – 16: Increases the limit on contributions to Health Savings Accounts to equal the maximum of the annual deductible and out-of-pocket expenses under a high deductible health plan.
Section – 17: Allows both spouses to make catch-up contributions to Health Savings Accounts.
Section -18: Sets forth parameters where Health Savings Account withdrawals may be used to pay qualified medical expenses incurred before the Health Savings Account was established.
Then there are four (4) Subtitles:
Subtitle 1: Section – 01: Repeals O-Care’s 10% tanning bed tax.
Subtitle 2: Section – 01: Repeals O-Care’s 3.8% Net Investment Tax.
Subtitle 3: Section – 01: Repeals the limitation for certain health insurance providers that exceeds $500,000 paid to an officer, director, or employer – a BIG “Fat Cat” benefit.
Subtitle 4: Section – 01: Repeals the O-Care tax on certain brand pharmaceutical manufacturers.
Subtitle 4: Section – 02: Repeals an annual O-Care fee on certain health insurers.
That is a “Cliff Notes” summary of the American Health Care Act, which I have to say appears to be a darn good start, but O-Care 2 or O-Care lite it is not, in my opinion. Frankly, I do not understand why the ability to purchase insurance across state lines isn’t included, but I guess that has to do with reconciliation and getting the bill through with only a majority as opposed to a super majority. Now we get to watch all the Washington Horse Trading!