The latest updated version of the Better Care Reconciliation Act (BCRA) was unveiled on July 13, 2017. This new version keeps the 3.8% net investment income tax and the 0.9% Medicare payroll tax. Among other provisions, the legislation would carry over from the original draft the repeal of the individual and employer healthcare mandates and delay the Cadillac tax until 2026.
With restrictions, the newest version of the BCRA also allows Health Savings Accounts (HSAs) to be utilized to pay insurance premiums. Starting in 2018, premiums that are not under an employer-sponsored plan and those which exceed the tax credits available under the bill, basically those for which a deduction is not available, could be paid using a HSA.
Probably the biggest departure from the previous draft would allow insurance companies to offer noncompliant plans outside the individual market exchanges so long as these insurers also offer the required plans in the exchanges. No federal subsidies would be available for the noncompliant plans. These provisions regarding the noncompliant plans are nowhere near final form as alterations are expected.
Finally, beginning in 2020, the BCRA would change the formula for calculating required premium contributions and look to age, geography and income.
It remains unclear when, or even if, the vote on this newer version will happen. The vote is delayed at least while Senator John McCain recovers from blood clot surgery.
Nick Spoltore is Senior Director of Tax & Advisory Content for Surgent CPE. Mr. Spoltore is a graduate of the University of Notre Dame and of Delaware Law School. Before joining Surgent, he practiced tax and business law at the firm of Heaney, Kilcoyne in Pennsylvania and also in Delaware.