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The American Health Care Act (AHCA): Proposed Policy Changes and Their Tax Impact to You

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On May 4, 2017 the House voted 217-213 in favor of the American Health Care Act (AHCA) marking the first step toward health care reform. As crafted, how do the tax provisions of the American Health Care Act differ from the Affordable Care Act (ACA), also known as Obamacare?

Here are some highlights from the bill. The AHCA:

  • Rescinds the requirement that all Americans have health insurance or pay a penalty, known as the individual mandate
  • Ends ACA insurance premium subsidies, and instead offers age-based yearly tax credits between $2,000 and $4,000 for individuals who don’t receive health insurance from the government or from an employer
  • Expands Health Savings Account annual contribution limits from the current cap of $6,750 to $13,100 for families, and $3,400 to $6,550 for individuals
  • Repeals a list of taxes imposed by the ACA, most notably the 0.9% Medicare surtax on wages and self-employment income for high-income taxpayers, and the 3.8% net investment income imposed on high-income taxpayers
  • Removes the employer mandate that larger companies offer health insurance to their employees or pay a penalty

The bill passed its first test in the House. It has now moved to the Senate where substantial changes are expected. We are tracking this bill and will provide additional updates as it progresses through Congress. If you have any questions, please contact your tax professional at Berntson Porter & Company, PLLC.