Employee Benefits Compliance

Senate Unveils HCR Bill version 2 (BCRA-2)

us capitol

The Senate today (July 13) released version #2 of the Republican health care reform proposal,  officially  titled the “Better Care Reconciliation Act” (BCRA).  Generally, version 2 is similar to version 1, but there are some changes. Already, two Senators have said they will vote against even allowing debate on the bill to begin: Sens. Rand Paul (R-Ky.) and Susan Collins (R-Maine).   (In case you have trouble remembering the acronym -“BCRA” – just think of the word “bickering”.)

In addition to the BCRA-2 bill, a separate health care reform bill was introduced by Republican Senators Lindsey Graham (R-SC) and Bill Cassidy (R-LA), in an attempt to secure support from enough Democrats in the Senate to pass some bill to repeal and replace the ACA.  Graham’s bill would retain many of the ACA protections but not the individual and employer mandates, would not repeal the ACA taxes, and would turn over the ACA funds to the states through a block grant, so each state could decide how to provide health care to its residents.


Quick  recap of GOP health care reform effort:  The House passed the American Health Care Act (AHCA) on May 4th.  The Senate introduced the Better Care Reconciliation Act, version 1 (BCRA-1), on June 22, and the Congressional Budget Office (CBO) issued a score of BCRA-1 on June 26th.  Senate Majority Leader Mitch McConnell initially hoped to call a vote on BCRA-1 before the July 4 recess; however, he pulled the bill before the end of June,  due to the CBO score and to opposition from both moderate and conservative Republican Senators.  BCRA-2 and Senator Graham’s proposal are attempts to address some of the major areas of disagreement.  A revised CBO score — for BCRA-2 — is expected soon, possibly as early as Monday, July 17th.

Update July 19th:  The CBO score was postponed, because it appears the Republicans do not have the 51 votes needed to pass BCRA-2.  It is unclear whether McConnell will pull the bill for now or will call a vote, either on the bill itself or on repeal a6-month wnd not replace the ACA.


Key Changes and Modification in  BCRA-2 — that Affect Employers and Employer Plans  

  • Association plans.  Allows small employer groups to join association plans and be exempt from small group rating and insurance market reforms (e.g., essential health benefits rules would not apply).  Also allows Professional Employer Organizations (PEOs) to establish association plans. Preempts state laws that limit or prohibit such plans, thus reducing a state’s authority to regulate association plans.
  • Tax on High-Income Earners. Continues ACA additional (o.9%)  Medicare tax and net investment tax (3.8%) on high-income individuals. Both the House bill and Senate BCRA-1 would eliminate these.
  • MLR Rebates.  Continues MLR rebates but beginning in 2019 allows states to set MLR rates and rebate rules.
  • HDHPs. Provides that plans that include coverage for abortions (except to save the mother’s life) do not qualify as “HSA-qualified” HDHPs, so participants cannot make HSA contributions and cannot use HSA funds to pay for premiums for such plans.  Also, subsidies may not be applied  to pay for plans that cover abortions.
  • HSAs. Allows HSA participants to use HSA funds to pay for HDHP premiums in the individual market, but not for amounts for which the individual receives premium tax credits, and cannot use HSA funds to pay for employer-sponsored HDHPs.
  • QSEHRAs. For small employer HRAs, eliminates “affordability” requirement for coverage paid/reimbursed by QSEHRA.

Other Key Changes and Modifications in BCRA-2

  • Catastrophic Coverage.  Allows health insurers to offer  catastrophic coverage (“skinny” policies) to any age group (beginning in 2019), so long as the insurer also offers an ACA-compliant policy in each “precious metals” group (i.e., bronze, silver, gold and platinum).  Catastrophic coverage would have higher deductibles and out-of-pocket maximums than ACA-compliant policies, would cover three primary care visits a year before the deductible, but would not be required to cover all of the “essential health benefits” mandated under the ACA (e.g., might not cover maternity, prescriptions, 100% coverage for specified preventive benefits?).  As a result, such policies will have much lower premiums, but premiums for ACA-compliant policies are expected to increase significantly, since only high claims individuals who need the services provided by ACA-compliant policies are likely to buy them.  Also allocates additional funds states can use to help pay premiums for individuals who buy ACA-compliant policies.
  • Continuous Coverage Incentive.  Imposes 6-month waiting period for coverage for any individual who had a lapse in coverage of more than 63 days and then applies for coverage in the individual market.  (This is a change from the House bill (AHCA), which imposes a 30% surcharge on such individuals and also allows states to apply for waivers to allow insurers to medically underwrite such individuals and increase rates.)
  • ACA Subsidies.   Continues ACA premium subsidy structure but limits eligibility to 350% of Federal Poverty Level, FPL (ACA allows subsidies for people with AGI of up to 400% of FPL);  sets subsidy amounts based on age, not income, except that subsidy starts phasing out at AGI above $75,000 ($150,000 for married filing jointly); changes benchmark plan definition (currently under ACA the benchmark is the second-lowest cost silver plan).
  • Community Rating. Increases rating ratio for individual and small plans from 3:1 (under ACA) to 5:1 (as under House bill).  This allows insurers to charge older insureds five times as much as younger insureds, rather than only three times as much.
  • Opioids.  Provides additional $45 billion to fight opioid abuse.