Health care bill to repeal and replace ACA passes U.S. House

May 10, 2017

The newly proposed health care bill, known as the American Health Care Act (AHCA), cleared its first hurdle after it was passed by the U.S. House of Representatives on May 4. The bill was designed as a repeal and replacement plan for the Patient Protection and Affordable Care Act (ACA), often referred to as Obamacare. Representatives largely voted along party lines, approving the bill 217 to 213.

If enacted, the new plan would eliminate most of the ACA's taxes, including penalties connected with the individual and employer mandates. The House bill now moves to the Senate. Substantial changes are expected, with some predicting the Senate may craft its own ACA repeal and replacement bill.

Please note the effective dates for the repeal of certain items if the bill would be enacted as written:

  1. Elimination of the employer and individual insurance mandates, by reducing the penalty amount to zero, effective for months beginning after Dec. 31, 2015.
  2. Repeal of the Premium Tax Credit for purchasing insurance through the exchange, effective for taxable years beginning after Dec. 31, 2019. The credit is tweaked for years 2018 and 2019. A new refundable tax credit is available starting in 2020.
  3. Repeal of the net investment income tax, effective for tax years beginning in 2017.
  4. Repeal of the 0.9% additional Medicare tax on wages that exceed $200,000, effective for tax years that begin in 2023.
  5. Elimination of taxes on medical device and tanning (effective for tax years beginning in 2017 and as of June 30, 2017 for the tanning excise tax).

Until the law is changed, we recommend following the current provisions of the ACA. We will continue to monitor progress and provide updates.

For additional details, please see the CCH Tax Briefing, ACA Repeal and Replacement.