Action item: On March 6, 2017, House Republicans released long-awaited proposed legislation, which has been named the American Health Care Act.

The proposed legislation has drawn opposition from Democrats, and also from some Republicans, and faces an uncertain future.

Although the proposed legislation has been described as a replacement for the Affordable Care Act, it preserves some of the Affordable Care Act’s more popular features, including making health plan coverage available to children up to age 26, and restricting pre-existing condition exclusions.

Among the more significant features of the proposed legislation:

• The proposed legislation repeals both the individual mandate and the employer mandate, the centerpieces of the Affordable Care Act, retroactive to December 31, 2015. As a result, individuals would not be required to purchase health insurance or pay a penalty, and employers would not be required to offer health insurance or pay a penalty.
• The so-called “Cadillac tax” on high cost, employer-provided health benefits is delayed until January 1, 2025.
• The proposed legislation expands the definition of qualified medical expenses, for purposes of favorable tax treatment, to include over-the-counter drugs. It also reduces the penalty tax applicable to distributions from health savings accounts that are not used for medical expenses. These changes would take effect in 2018.
• Beginning in 2020, the proposed legislation creates a refundable, age-based tax credit for individuals who do not have access to government health insurance programs or employer health insurance. The credit is subject to limits based upon adjusted gross income (increased to take into account tax-exempt interest and other items) and the number of family members.
• The limit on health savings account contributions is increased beginning in 2018, to the maximum annual deductible for high deductible health plans—those annual deductible limits are currently $6,550 for self-only coverage and $13,100 for family coverage.
• The dollar limit on contributions to employer-sponsored flexible spending accounts, which for 2017 is $2,600 indexed for inflation, is repealed beginning in 2018.
• The 0.9% Medicare hospital insurance surtax and the 3.8% tax on net investment income, which were enacted to help finance the Affordable Care Act, are repealed starting in 2018.