House Tax-Writing Committee Reviews Various Health Care Measures as New Reform Bill is Introduced

May 20, 2016

In a House Ways and Means Committee hearing this week, several members discussed tax-related legislation that could be included in the House Health Care Reform Task Force proposal that is expected to be rolled out in June.  Although the House Health Care Reform Task Force proposal is likely to include a recommendation to limit the individual tax exclusion on employer-provided health benefits, the idea was not discussed at the hearing.  Also notably missing was any discussion of repealing the ACA's excise tax on high-value employer-provided health benefits ("Cadillac Tax").  Some of the bills that were highlighted include:

  • The Health Savings Protection Act (H.R. 4832), which would exempt Archer medical savings plans, health savings accounts, and health flexible spending arrangements from the ACA’s Cadillac Tax;

  • The Small Business Healthcare Relief Act (H.R. 2911), which would allow small businesses to create a health reimbursement arrangement to enable their employees to purchase health insurance in the individual market;

  • Halt Tax Increases on the Middle Class and Seniors Act (H.R. 3590), which would reduce the individual tax deduction for medical expenses from 10% of adjusted gross income to 7.5%; and

  • H.R. 928, which would repeal the annual tax on health insurance companies.
Separately, Rep. Pete Sessions (R-TX) and Sen. Bill Cassidy (R-LA) introduced a bill that would give Americans an alternative to the ACA rather than replace the law.  Under the plan, every adult in the U.S. would receive a $2,500 tax credit to buy health coverage, and families would get an additional $1,500 for each dependent.  However, the new tax credit would replace the tax exclusion for employer-provided health benefits, though it could be assigned to an employer, transferred to a Roth health savings account or advanced for annual distribution.  According to Rep. Sessions, the bill is not meant to compete with the House Health Care Task Force's effort. "Everybody's submitting their ideas, so it's very complementary," he said.