AHCA in Plain English

Below are summaries of the different sections of the AHCA to help you identify the section(s) of the bill that most hurt you.

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These summaries are not fulsome descriptions because (who knew!) healthcare is complicated.  Do not rely on them for any reason other than in connection with making your video for this project.  Information is based on various sources, including the summary prepared by the Ways & Means and Energy & Commerce Committees of the U.S. House of Representatives, the summary prepared by the Healthcare Association of New York State, the Health Affairs Blog, the American College of Physicians Letter Opposing the AHCA and Forbes Magazine.

AHCA TITLE 1:

Subtitle A: Patient Access to Public Health Programs

Section 101 – The Prevention and Public Health Fund. This section eliminates funding for immunization programs, programs that fight and contain public health outbreaks, and programs that identify and prevent lead poisoning.

This section eliminates funding for the Prevention and Public Health Fund.   Eliminating the Prevention and Public Health Fund would impact both federal and state programs and means (1) shrinking the national vaccine program, which support vaccinations across the life course – from newborns to the elderly, by 50%, (2) shrinking the funding for tracking public health threats like Zika and foodborne illnesses like salmonella by about one third and severely hindering efforts to fight and contain these threats, and (3) limiting our ability to prevent and identify lead poisoning in our children. America witnessed the damaging toll that lead can take in the brains and bodies of our kids when it saw the tragedy unfold last year in Flint, Michigan.

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Section 102 – Community Health Center Program. This section provides (only) an additional $422 million for the Community Health Center Fund for fiscal year 2017 due to expected increase in strains on community health centers due to loss of Medicaid expansion and defunding Planned Parenthood.

Community health centers are community-based outpatient facilities that provide health services to medically underserved populations. Other provisions of the AHCA, including capping federal financing, eliminating enhanced federal funding for the Medicaid expansion and defunding Planned Parenthood, are expected to increase strains on community health centers, which already face funding constraints and uncertainty regarding their future funding.  The additional funding provided for in this section is meant to reduce that strain.

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Section 103 – Federal Payments to States. This section “defunds” Planned Parenthood.

States would be permitted to elect, beginning October 1, 2017, to condition medical assistance for adult beneficiaries who are non-disabled, non-elderly, and not pregnant, on their satisfaction of a work requirement. Work requirements under this section are those defined in section 407(d) of the Social Security Act and include unsubsidized employment, subsidized private or public sector employment, on-the-job or vocational training, job search and job readiness assistance, community services programs, vocational education, job skills training, education related to employment and secondary school attendance.

A state could not apply work requirements to pregnant women through the end of the month in which the 60 day period beginning on the last day of her pregnancy ends; children under age 19; individuals who are the only parent or caretaker of a child under the age of 6 or the only parent or caretaker of a child with a disability; or to individuals under age 20 who are married or the head of the household and who maintain satisfactory attendance at school or participate in education directly related to employment.

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Subtitle B: Medicaid Program Enhancement

Section 111 – Repeal of Medicaid Provisions. Section 111 would sunset a number of Medicaid provisions that were enacted as part of the ACA.

Section (111) (a) and 111 (3)

Hospital Presumptive Eligibility. A provision requiring states to allow hospitals to make presumptive eligibility determinations for all categories of Medicaid beneficiaries would be repealed beginning January 1, 2020. States would still be allowed to make presumptive eligibility determinations for children, pregnant women, and breast cancer and cervical cancer patients.

Section 111 (1) (b)

Low-Income Children Over Age 6.  The requirement that states provide Medicaid to low-income children over age 6 in families with income up to 133% of the federal poverty level ($15,800 for one person, or $32,319 for a family of four) would be repealed and the mandatory Medicaid income eligibility level for poverty-related children would revert back to at or below 100 percent of federal poverty level on December 31, 2019.

Section 111 (2)

Enhanced Federal Matching Payments for Attendant Care Services. Repeals the 6 percentage point bonus in the federal match rate for community- based attendant services and supports on December 31, 2019.

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Section 112(a) – Repeal of Medicaid Expansion. This section repeals the expansion of Medicaid to adults with incomes above 133% of the federal poverty level.

Before the ACA, it was difficult or impossible in many states for low-income adults without children to get coverage through Medicaid. This section terminates Obamacare’s mandatory requirement for states to expand Medicaid for certain childless non-disabled, non-elderly, non-pregnant adults with incomes up to 133% of the federal poverty level ($15,800 for one person, or $32,319 for a family of four). The section also sunsets the optional ability for a state to cover adults with incomes above 133% of the federal poverty level, effective December 31, 2017.

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Section 112(b) – Sunset of Essential Health Benefits Requirement. This section permits states to waive the ACA’s essential health benefit requirements.

This section eliminates the requirement that alternative benefit plans under Medicaid include the coverage of essential health benefits after December 31, 2019. Essential health benefits are: (1) ambulatory patient services, (2) emergency services, (3) hospitalization, (4) maternity and newborn care, (5) mental health and substance use disorder services, including behavioral health treatment, (6) prescription drugs, (7) rehabilitative and habilitative services and devices, (8) laboratory services, (9) preventive and wellness services and chronic disease management, and (10) pediatric services, including oral and vision care.

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Section 113 – Elimination of DSH Cuts. Repeals the Medicaid Disproportionate Share Hospital (DSH) cuts for non-expansion states in fiscal year 2018.

Repeals the Medicaid Disproportionate Share Hospital (DSH) cuts for non-expansion states in fiscal year 2018. States that expanded Medicaid would have their DSH cuts repealed completely beginning with fiscal year 2020.

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Section 114 (a, b, & c) – Reducing State Medicaid Costs. This section reduces the number of people eligible for Medicaid.

Section 114 (a) – Letting States Dis-Enroll High Lottery Winners

States would be required to count lottery winnings (for lotteries occurring on or after January 1, 2020) or other lump sum income received after that date when determining eligibility for Medicaid based on modified adjusted gross income.  Includes a hardship exemption by which states could continue to provide Medicaid coverage for an individual if the denial of coverage would cause an undue medical or financial hardship as determined based on criteria established by the Secretary of HHS.

Section 114 (b) – Repeal of Retroactive Eligibility

The period of retroactive eligibility for Medicaid beneficiaries would be shortened. Under

current law, Medicaid eligibility begins at the start of the third month before the month in which the person made their application. Under the legislation, effective with applications made on or after October 1, 2017, eligibility would begin at the start of the month in which the individual made their application.

Section 114 (c) – Updating Allowable Home Equity Limits in Medicaid.

Repeals the authority for states to elect to substitute a higher home equity limit that is above the statutory minimum in law. The bill would eliminate the option of a state to begin counting the equity of an applicant’s home once it exceeds $750,000 in determining Medicaid eligibility for individuals in need of nursing home or other long-term care services. Beginning with eligibility determinations made after 180 days after enactment of the bill, all states would be required count equity interest above $500,000.

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Section 115 – Safety Net Funding for Non-Expansion States. And a hearty "good luck" to expansion states 🙁

Provides $10 billion over five years to non-expansion states for safety net funding. A total of $2 billion in new “safety net” funding would be made available per year for FYs 2018 –2022 to states that, as of July 1 of the preceding fiscal year, did not expand coverage for ACA childless adults. The funds would be made available to states to allow for payments to health care providers that provide Medicaid services.

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Section 116 – Providing Incentives for Increased Frequency of Eligibility Redeterminations.

Requires states with Medicaid expansion populations to, as of October 1, 2017, redetermine expansion enrollees’ eligibility every 6 months. This ensures individuals not eligible for the program are not remaining enrolled longer than they should, while also allowing eligible individuals to remain enrolled.

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Section 117 – Permitting States to Apply a Work Requirement for Nondisabled, Nonelderly, Non-pregnant Adults Under Medicaid.

States would be permitted to elect, beginning October 1, 2017, to condition medical assistance for adult beneficiaries who are non-disabled, non-elderly, and not pregnant, on their satisfaction of a work requirement. Work requirements under this section are those defined in section 407(d) of the Social Security Act and include unsubsidized employment, subsidized private or public sector employment, on-the-job or vocational training, job search and job readiness assistance, community services programs, vocational education, job skills training, education related to employment and secondary school attendance.

A state could not apply work requirements to pregnant women through the end of the month in which the 60 day period beginning on the last day of her pregnancy ends; children under age 19; individuals who are the only parent or caretaker of a child under the age of 6 or the only parent or caretaker of a child with a disability; or to individuals under age 20 who are married or the head of the household and who maintain satisfactory attendance at school or participate in education directly related to employment.

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Subtitle C: Per Capita Allotment for Medical Assistance

Section 121 – Per Capita Allotment for Medical Assistance. This section imposes either a block grant or per capita caps on Medicaid.

This section reforms federal Medicaid financing by creating a per capita cap model (i.e., per enrollee limits on federal payments to states) starting in fiscal year 2020. In short, it puts caps on Medicaid payouts. 

Certain payments are exempt from the caps. For example, DSH payments operate outside of the caps since they are already a capped allotment. Administrative payments and funding for childhood vaccines are also exempt. In addition, certain populations would be exempt, including: (1) individuals covered under a CHIP Medicaid expansion program; (2) individuals who receive medical assistance through an Indian Health Service facility; (3) individuals entitled to medical assistance coverage of breast and cervical cancer treatment due to screening under the Breast and Cervical Cancer Early Detection Program; (4) unauthorized aliens eligible for Medicaid emergency medical care; and (5) coverage of tuberculosis-related services for individuals infected with TB.

The amendment also creates a new option for states to opt to receive, starting Fiscal Year 2020, a flexible block grant of funds for providing health care for their traditional adult and children populations served in the per capita allotment.  A state plan would be required to specify the applicable categories of individuals that the state is choosing to incorporate under their block grant cap. A state may choose to provide health care to either non-expansion adults and children, or just non-expansion adults.

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Subtitle D: Patient Relief and Health Insurance Market Stability

Section 131 – Repeal of Cost-Sharing Subsidy.

Cost sharing subsidies provided under section 1402 of the ACA would be repealed effective for plan years beginning after December 31, 2019. (Section 1402 provides for payments to issuers to reduce the cost-sharing amounts for individuals with incomes no less than 100% and not more than 250% of the federal poverty level who buy silver level coverage through the Exchanges.)

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Section 132 – Patient and State Stability Fund. This section provides for the establishment of the Patient and State Stability Fund. Experts believe this funding (along with other sources of funding in the AHCA) is insufficient to sustain high risk pools.

This section establishes a Patient and State Stability Fund, which will transfer $15 billion from the Treasury to the states in each of 2018 and 2019, and then $10 billion per year from 2020 through 2026.  The Fund is intended to stabilize individual and small group state insurance markets and lower patient cost.  Therefore, the money is designed to go disproportionately towards those states with low plan competition, where there is a risk that the market could collapse. Experts believe this funding (along with other sources of funding in the AHCA) is insufficient to sustain high risk pools.

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Section 133 – Continuous Health Insurance Coverage Incentive. This section imposes a penalty on individuals who do not maintain continuous coverage.

Beginning in open enrollment for benefit year 2019, there will be a 12-month lookback period to determine if the applicant went longer than 63 days without continuous health insurance coverage. If the applicant had a lapse in coverage for greater than 63 days, issuers will assess a flat 30 percent late-enrollment surcharge on top of their base premium based on their decision to forgo coverage. This late-enrollment surcharge would be the same for all market entrants, regardless of health status, and discontinued after 12 months, incentivizing enrollees to remain covered.

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Section 134 – Increasing Coverage Options.

Under the Affordable Care Act, plan issuers are required to label their offerings by metal tier: Bronze, Silver, Gold, and Platinum. These metal tiers are determined by a calculation known as actuarial value (AV). In an attempt to improve plan choice, this section repeals the AV standards, which helps improve benefit design flexibility.

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Section 135 – Change in Permissible Age Variation in Health Insurance Premium Rates. This section allows insurers to charge older people up to five times as much as younger people.

Current law limits the cost of the most generous plan for older Americans to three times the cost of the least generous plan for younger Americans. The true cost of care is 4.8-to-one, according to health economists. This provision loosens the ratio to five-to-one and gives States the flexibility to set their own ratio.  The MacArthur amendment further allows states to request a waiver to allow insurers to charge premiums even higher than five-to-one beginning in 2018.

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Section 136 – Permitting States to Waiver Certain ACA Requirements to Encourage Fair Health Insurance Premiums. This section would allow insurers to charge certain people with pre-existing conditions higher premiums.

This section, which stems from the MacArthur amendment, allows states to request a waiver from certain ACA requirements.  For example, states could request a waiver to permit insurers to (1) charge older people premiums more than five times as younger people, (2) offer plans that do not cover all “essential health benefits”, such as maternity care and mental health, and (3) charge certain people with pre-existing conditions higher premiums.  The section allows states to waive out of the ACA’s “community rating” provision, meaning states could charge people with pre-existing conditions higher premiums after they have a break in health coverage. This means that when those uninsured people returned to the market, health plans could charge them higher prices based on their expected costs for one year.

Note: You have to scroll down from here to read Section 136 as it is not hotlined in the table of contents.

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Section 137 – Constructions. No discrimination by gender or age, but they charge women more for pregnancy and gynecological issus as "preexisting conditions" and age is now a "preexisting condition."

Section 137 – Constructions

This section provides that nothing in the AHCA shall be construed as permitting health insurance issuers to discriminate in rates for health insurance coverage by gender. This section provides that nothing in the AHCA shall be construed as permitting health insurance issuers to limit access to health insurance coverage for individuals with preexisting conditions. However, access to health insurance coverage is not the same as access to affordable health insurance coverage.

Note: You have to scroll down to get to Section 137 from this link.

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Subtitle E: Patient Relief and Health Insurance Market Stability

Section 141 – American Health Care Implementation Fund. Caps & Tax Credits, Oh My!

This section provides for the establishment of an American Health Care Implementation Fund to carry out: (1) Sec. 121. Per capita allotment for medical assistance; (2) Sec. 132. Patient and State Stability Fund; (3) Sec. 202. Additional modifications to premium tax credit; and (4) Sec. 214. Refundable tax credit for health insurance coverage. A $1billion appropriation is made to the fund.

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AHCA Title II— Ways and Means

Subtitle A: Repeal and Replace of Health-Related Tax Policy

Section 201 – Recapture Excess Advance Payments of Premium Tax Credits. This section requires any individual who was overpaid in premium tax credits to repay the entire excess amount, regardless of income.

The amount a household is required to pay towards their premiums is based on income. If a household’s income increases during the tax year, excess premium tax credits may result. Under current law, for households with incomes less than 400 percent of the federal poverty level there are certain limits on the amount the household is required to repay the federal government for the excess premium tax credits. For tax years 2018 and 2019, this section requires any individual who was overpaid in premium tax credits to repay the entire excess amount, regardless of income.

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Section 202 – Additional Modifications to Premium Tax Credit. This allows you to get a tax credit for a "catastrophic plan" that may not actually cover you when you need it. Also, rescinds tax credit for any plan that covers abortion.

Under current law, qualified health plans must meet certain requirements for households to be eligible for the premium tax credit. This section amends those requirements to make available premium tax credits for the purchase of “catastrophic-only” qualified health plans and certain qualified plans not offered through an Exchange. Additionally, this section prohibits premium tax credits from being used to purchase plans that offer elective abortion coverage. Lastly, this section revises the schedule under which an individual’s or family’s share of premiums is determined by adjusting for household income and the age of the individual or family members.

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Section 203 – Small Business Tax Credit. This section repeals the small business tax credit under the ACA.

This section repeals ACA’s small business tax credit beginning in 2020. Between 2018 and 2020, under the proposal, the small business tax credit generally is not available with respect to a qualified health plan that provides coverage relating to elective abortions.

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Section 204 – Individual Mandate. This section would effectively repeal the individual mandate to purchase health insurance. But you will be penalized for not maintaining continous coverage.

Under current law, most individuals are required to purchase health insurance or pay a penalty. This section would reduce the penalty to zero for failure to maintain minimum essential coverage; effectively repealing the individual mandate. The effective date would apply for months beginning after December 31, 2015, providing retroactive relief to those impacted by the penalty in 2016.  Note that the AHCA instead imposes a penalty under Section 133 on individuals who do not maintain continuous coverage.

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Section 205 – Employer Mandate. This section would effectively repeal the employer mandate to provide health insurance.

Under current law, certain employers are required to provide health insurance or pay a penalty. This section would reduce the penalty to zero for failure to provide minimum essential coverage; effectively repealing the employer mandate. The effective date would apply for months beginning after December 31, 2015, providing retroactive relief to those impacted by the penalty in 2016.

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Section 206 – Repeal of the Tax on Employee Health Insurance Premiums and Health Plan Benefits.

The ACA imposed a 40 percent excise tax on high cost employer-sponsored health coverage, also known as Cadillac plans. Under current law, the tax will go into effect in 2020. This section changes the effective date of the tax. It will not apply for any taxable period beginning after December 31, 2019, and before January 1, 2026. Thus, the tax will apply only for taxable periods beginning after December 31, 2025.

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Section 207 – Repeal of the Tax on Over-the-Counter Medications.

This section would allow reimbursements from health Flexible Spending Accounts (FSAs) and Health Reimbursement Arrangements (HRAs) and distributions from Health Savings Accounts (HSAs) or Archer Medical Savings Accounts (MSAs) to be used for over-the-counter medications and those amounts would be excluded from the taxpayer’s income. In the case of HSAs and MSAs, the provision would be effective for amounts paid with respect to taxable years beginning after December 31, 2016. In the case of health FSAs and HRAs, it would be effective for expenses incurred for taxable years beginning after December 31, 2016.

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Section 208 – Repeal of Increase of Tax on Health Savings Accounts.

Distributions from an HSA or MSA that are used for qualified medical expenses are excludible from gross income. Distributions that are not used for qualified medical expenses are includible in income and are generally subject to an additional tax. The tax imposed on distributions from HSAs for nonqualified medical expenses would be reduced from 20% to 10%. The tax imposed on distributions from MSAs would be reduced from 20% to 15%.

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Section 209 – Repeal of Limitations on Contributions to Flexible Savings Accounts.

The ACA limits the amount an employer or individual may contribute to a health FSA to $2,500, indexed for cost-of-living adjustments. This section repeals the limitation on health FSA contributions for taxable years beginning after December 31, 2016.

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Section 210 – Repeal of Medical Device Tax.

The ACA created a new 2.3 percent excise tax on the sale of certain medical devices. This section repeals the medical device tax beginning after December 31, 2016.

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Section 211 – Repeal of Elimination of Deduction for Expenses Allocable to Medicare Part D Subsidy.

Currently, a deduction for qualified retiree health prescription drug expenses that would otherwise be allowable to a taxpayer (i.e., an employer)  is not available if the taxpayer excludes from income qualified retiree prescription drug plan subsidies received from HHS with respect to those expenses (i.e. the taxpayer cannot deduct prescription drug expenses if the retiree also has prescription drug coverage through an employer that is subsidized by HHS). This section would be amended effective for taxable years beginning after December 31, 2016 to provide that such a taxpayer would be able to claim a deduction for covered retiree prescription drug expenses even though that taxpayer excluded from income qualified retiree prescription plan subsidies received from HHS.

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Section 212 – Reduction of Increase in Income Threshold for Medical Expense Deduction.

Under current law, taxpayers may deduct unreimbursed qualified medical expenses that exceed 10% of adjusted gross income.  The deduction threshold would be changed to 5.8% of adjusted gross income effective for taxable years beginning after December 31, 2016.

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Section 213 – Repeal of Medicare Tax Increase.

The increased Medicare hospital insurance taxes owed by taxpayers whose wages exceed a certain threshold (e.g., $250,000 in the case of a joint return) would be repealed effective with respect to remuneration received after, and taxable years beginning after, December 31, 2022.

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Section 214 – Refundable Tax Credit for Health Insurance.

This section repeals the current tax subsidy and replaces it with an advanceable, refundable tax credit for the purchase of state-approved, major medical health insurance. To be eligible, generally, an individual must not have access to government health insurance programs or an offer from any employer; and be a citizen, national or qualified alien of the United States, and not incarcerated. The credits are adjusted by age and range from a low of $2,000 for those under age 30 to a high of $4,000 for those over age 60. The credits are additive for a family and capped at $14,000. The credits are available in full to those making $75,000 per year ($150,000 joint filers). The credit phases out by $100 for every $1,000 in income higher than those thresholds.

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Section 215 – Maximum Contribution Limit to Health Savings Account Increased to Amount of Deductible and Out-Of-Pocket Limitation.

This section increases the basic limit on aggregate Health Savings Account (HSA) contributions for a year to equal the maximum on the sum of the annual deductible and out-of-pocket expenses permitted under a high deductible health plan. In 2017, those limits would $6,550 in the case of self-only coverage and $13,100 in the case of family coverage.

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Section 216 – Allow Both Spouses to Make Catch-Up Contributions.

This section would effectively allow both spouses to make catch-up contributions to one HSA beginning in 2018.

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Section 217 – Special Rule for Certain Medical Expenses Incurred Before Establishment of HSA.

This section sets forth certain circumstances under which HSA withdrawals can be used to pay qualified medical expenses incurred before the HSA was established. Starting in 2018, if an HSA is established during the 60-day period beginning on the date that an individual’s coverage under a high deductible health plan begins, then the HSA is treated as having been established on the date coverage under the high deductible health plan begins for purposes of determining if an expense incurred is a qualified medical expense.

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Subtitle B: Repeal and Replace of Certain Consumer Taxes

Section 221 – Repeal of Tax on Prescription Medications.

This section would repleal the annual fee on entities engaged in the business of manufacturing or importing branded prescription drugs for sale to any specified government program, or pursuant to coverage under any such programwith respect to any calendar year beginning after December 31, 2016.

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Section 222 – Repeal of Health Insurance Tax.

The annual fee on entities engaged in the business of providing health insurance in the U.S. would be repealed for any calendar year beginning after December 31, 2016.

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Subtitle C:  Repeal of Tanning Tax

Section 231 – Repeal of Tanning Tax.

The 10% retail sales tax on indoor tanning services would be repealed for services performed after June 30, 2017.

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Subtitle D: Remuneration from Certain Insurers

Section 241 – Remuneration from Certain Insurers.

This section repeals the limit on the deduction of a covered health insurance provider for compensation attributable to services performed by an applicable individual starting in 2017. In general, health insurance providers may currently only deduct as a business expense for a year the compensation paid to any officers, employees, directors, and other workers or service providers (such as consultants) performing services for or on behalf of the insurer up to $500,000.

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Subtitle E: Repeal of Net Investment Tax

Section 251 – Repeal of Net Investment Tax.

The 3.8 percent tax on net investment income of certain high-income taxpayers ($250,000 joint return or surviving spouse, $125,000 in the case of a married individual filing a separate return, and $200,000in any other case) would be repealed effective for tax years beginning after December 31, 2016.

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