10 ways the latest version of Trumpcare could impact you, by Keith Speights, The Motley Fool, 6/27/17
Here's how the Senate version of Trumpcare might change your healthcare access and costs.
Trumpcare "version 2.0" has been released. On Thursday, U.S. Senate Republicans unveiled details of their bill to replace Obamacare. The draft legislation, referred to as the "Better Care Reconciliation Act," has many similarities to the American Health Care Act healthcare reform legislation passed by the U.S. House of Representatives last month -- but there are also some key differences.
President Trump has already indicated support for the Senate version. He stated publicly that he urged senators to use savings that would be created by the House bill to give the Senate bill more "heart." Here are 10 ways that the latest version of Trumpcare could impact you if it becomes law.
1. Keeps Obamacare on life support for now With major health insurers continuing to withdraw, the Obamacare exchanges for providing individual health insurance are in danger of unraveling. To keep the individual health insurance market from falling apart while the new Trumpcare reforms are implemented, the Senate bill allocates federal funds for cost subsidies to insurers until 2019. This would likely make it easier for many Americans to find coverage until the GOP legislation fully takes effect.
2. Eliminates the individual mandate Obamacare requires Americans to obtain health insurance or pay a tax penalty if they don't. This individual mandate would be eliminated by both the Senate version of Trumpcare and the House version. The intent is basically this: If you don't like your health insurance, you don't have to keep it.
3. Changes eligibility requirements for premium tax credits Obamacare allowed subsidies for Americans who made up to 400% of the poverty level. The Senate bill uses a cap of 350% for premium tax credits, which means fewer in the middle class will qualify for assistance. Unlike Obamacare, though, it also allows individuals below the poverty line to receive financial assistance. That's potentially good news for some Americans living in states that didn't expand Medicaid with Obamacare. While the House bill based tax credits only on age, the Senate version bases the financial assistance on income level.
4. Cuts taxes Obamacare included an assortment of taxes. Most of them go away with both the Senate and House versions of Trumpcare, including the medical device tax and prescription drug tax. You won't have to pay the 3.8% net investment income tax imposed by Obamacare if you're a married taxpayer filing a separate return making $125,000 or more annually, if you're married filing a joint return making $250,000 or more annually, or if you file as an individual and make $200,000 or more annually.
5. Leaves the status quo for pre-existing conditions Technically, coverage for pre-existing conditions is an area where the Senate legislation won't impact Americans. While the House bill allowed states to obtain waivers that could permit insurers to charge more for individuals with pre-existing conditions, the Senate bill doesn't mention pre-existing conditions at all.
6. Allows states to get waivers to change minimum benefit levels Obamacare requires every health insurance plan to cover "essential health benefits," including mental health and substance-abuse services, prescription drugs, preventive care, maternity care, emergency services, and lab services. Like the House bill, the Senate version of Trumpcare allows states to obtain waivers that would enable them to set different minimum benefit levels. This could mean that you will be able to obtain individual health insurance with lower premiums, since insurers could charge less for plans with fewer benefits if your state receives a waiver.
7. Changes health savings accounts Both the Senate and House health reform bills promote use of health savings accounts (HSAs). The Senate legislation would increase the amount you can put into an HSA for individuals from $2,250 to $5,000, and for families from $4,500 to $10,000. It would also allow both spouses to make catch-up contributions to the same HSA. In addition, the bill reduces the taxes on HSA distributions not used for qualified medical expenses from 20% to 10%.
8. Eliminates maximum contribution limit for flexible spending accounts Under current law, you can only contribute up to $2,500 of your salary to a flexible spending account (FSA). The Senate version of Trumpcare eliminates this cap altogether. This means that you could reduce your personal health expenditures by using an FSA to avoid paying taxes on healthcare costs.
9. Changes Medicaid significantly If you're on Medicaid, the Senate bill could impact you in several ways. For one thing, like the House legislation, it allows states to require able-bodied individuals to work. The Senate bill also phases out the Obamacare Medicaid expansion beginning in 2020, which means that some states could have to tighten their Medicaid eligibility requirements. Over the long run, both Senate and House bills would change federal reimbursement for Medicaid to a per capita basis. The Senate version would also peg Medicaid spending growth to the general consumer price index (CPI) instead of the medical-care CPI beginning in 2025, which would reduce overall funding of Medicaid.
10. Eliminates the employer mandate. Obamacare required employers with 50 or more full-time employees to provide health insurance coverage to their employees. While implementation of this provision was delayed twice, it's still part of Obamacare. Under both the Senate and House versions of Trumpcare, this employer mandate is repealed. This could be good news for small business owners concerned about the cost of providing insurance. On the other hand, it could be bad news for employees of small businesses who hoped to obtain coverage through their employers.