United States

American Health Care Act approved by House of Representatives

TAX BLOG


On May 4, 2017, the American Health Care Act (AHCA), which modifies the Affordable Care Act (ACA), was passed by the House of Representatives, but the bill still faces an uncertain future.

The Affordable Care Act, also known as Obamacare, has been in effect for seven years.

Although not a complete repeal and replacement of the ACA, the AHCA does represent a shift in health care policy to allow more choice by individuals, employers, and states and fewer mandates by the federal government. In particular, the AHCA repeals certain ACA taxes, including the tax on individuals for not having health insurance and the tax on businesses with at least 50 full-time employees that do not offer health insurance to their employees. The AHCA also reduces funding for Medicaid and revises the current system for providing tax subsidies to purchasers of individual health insurance.

From the beginning, the AHCA has had both supporters and opponents within Congress. The House of Representatives originally was scheduled to vote on the AHCA on March 24, 2017, but shortly before the vote, the Republications decided to withdraw the bill due to lack of support. Subsequently, the bill was amended to garner additional support, and it passed in the House by a narrow margin. The AHCA now moves to the Senate where it is expected to face stiff opposition.

It is questionable whether both houses of Congress can come to agreement on the AHCA so its future is uncertain. Until the AHCA is passed by Congress and signed by President Trump, the Affordable Care Act is still the law and individuals and businesses should comply with the ACA to avoid potential tax penalties for noncompliance. 


Jill Harris

Senior Director

Jill helps businesses with planning and compliance for employee welfare and retirement plans. She can be reached at jill.harris@rsmus.com.

Areas of focus: Washington National TaxAffordable Care Act