In this webcast we discussed the status of the health care bill in the Senate and compared the Senate provisions as of July 18 to those passed by the House in June 2017.

1. Affordable Care Act series
Employer update during
2017 season of change
July 18, 2017
Watch a replay of the webcast

2. Page 2 The Affordable Care Act (ACA) – Employer update during 2017 season of change
Disclaimer
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3. Page 3 The Affordable Care Act (ACA) – Employer update during 2017 season of change
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4. Page 4 The Affordable Care Act (ACA) – Employer update during 2017 season of change
Moderator
Ann Bradshaw
ann.bradshaw@ey.com
Partner
National Director
ACA Compliance & Reporting
Client Services Leader
Ernst & Young LLP
Houston, TX
Speakers
Helen Morrison
helen.morrison@ey.com
Principal
National Tax
Compensation and Benefits
Ernst & Young LLP
Washington, DC
Heather Meade
heather.meade@ey.com
Principal
Washington Council
Ernst & Young
Ernst & Young LLP
Washington, DC
Alan Ellenby
alan.ellenby@ey.com
Executive Director
ACA Technical
Advisory Leader
Ernst & Young LLP
Chicago, IL
Annette King
annette.king@ey.com
Executive Director
ACA Center of
Excellence Leader
Ernst & Young LLP
Tampa, FL
Today’s
panel

5. Page 5 The Affordable Care Act (ACA) – Employer update during 2017 season of change
Agenda
Today’s agenda
► Where things stand today
► Federal legislative update
► State legislative update
► Employer response
► IRS developments and
related reporting matters

6. Where things
stand today

7. Page 7 The Affordable Care Act (ACA) – Employer update during 2017 season of change
Polling question
In your view, how likely is it that significant changes
will be made to the employer mandate requirements
of the Affordable Care Act (ACA) in 2017?
A. Very likely
B. Somewhat likely
C. Not likely
D. No chance

8. Page 8 The Affordable Care Act (ACA) – Employer update during 2017 season of change
In the news
Donald Trump elected 45th
President of the United States
Fox News – November 9, 2016
Affordable Care Act remains
“law of the land,” but Trump
vows to explode it
The Washington Post – March 24, 2017
House Republicans pull
health care bill
CNN – March 25, 2017
House passes measure to
repeal and replace the
Affordable Care Act
The New York Times – May 4, 2017
Senate GOP unveils health
care bill
CNN – July 13, 2017
New Senate Republicans
health care bill already in
trouble
CNBC – July 14, 2017

9. Page 9 The Affordable Care Act (ACA) – Employer update during 2017 season of change
This morning’s headlines
“As I have always said, let ObamaCare fail and then come together and do a great
healthcare plan. Stay tuned!”
President Trump – July 18, 2017
7:58 AM
“… So, in the coming days, the Senate will vote to take up the House bill with the first
amendment in order being what a majority of the Senate has already supported in
2015 and that was vetoed by then-President Obama: a repeal of Obamacare with a
two-year delay to provide for a stable transition period to a patient-centered health care
system that gives Americans access to quality, affordable care.”
U.S. Senate Majority Leader Mitch McConnell (R-KY) – July 18, 2017

10. Page 10 The Affordable Care Act (ACA) – Employer update during 2017 season of change
Key provisions in previous ACA reconciliation legislation
that passed the House and Senate during 114th Congress
► H.R. 3762 – the Restoring Americans’ Healthcare Freedom Reconciliation
Act of 2015 was passed by Congress, but vetoed by President Obama on
January 8, 2016
► Repeals premium tax credits, cost-sharing subsidies and authority of Secretary of
Health and Human Services (HHS) to make eligibility determinations beyond
December 31, 2017
► Removes authority to administer reinsurance program
► Scales back the Medicaid expansion beyond December 31, 2017
► Repeals key taxes and industry fees (e.g., Medicare tax on high-income earners,
pharma/device/insurer fees, tanning tax); eliminates Cadillac tax
► Reduces individual and employer mandate penalties to $0
► Rescinds funds in the Prevention/Public Health Fund
► Did not address: insurance market reforms, Exchanges, medical loss ratio
(MLR) requirements, Centers for Medicare and Medicaid Innovation
(CMMI), Independent Payment Advisory Board (IPAB), Medicare provisions,
employer reporting

11. Page 11 The Affordable Care Act (ACA) – Employer update during 2017 season of change
ACA repeal and replace
Cost of coverageCoverage numbers
Market stability
Effect of Medicaid changes
Competing needs must come together
Must meet procedural
budgetary and policy
limitations to proceed
under reconciliation
Consensus
between
moderates and
conservatives

12. Federal
legislative
update

13. Page 13 The Affordable Care Act (ACA) – Employer update during 2017 season of change
The ACA: repeal and replace
2017 congressional timelines
Jan Feb Mar Apr May Jun Jul Aug Sept Oct
February 28:
President
addressed joint
session
of Congress
January-March: House
develops repeal and
replace legislation
June 22: Senate
released draft of
health care
proposal, Better
Care Reconciliation
Act (BCRA)
July 31-September 5:
Congress summer
recess; Senate summer
recess delayed
March 24: Vote on the
American Health Care
Act (AHCA) is canceled
May 4:
House voted in
favor of AHCA
TODAY
October:
Government
Debt ceiling
July 13: Senate
released updated
draft of BCRA
September 30:
Government funding
authorization for CHIP
and Federal Aviation
Administration expires
March 20:
American Health
Care Act (AHCA)
introduced in the
House of
Representatives
July 3-7:
July 4th
recess
July 15:
BCRA vote
postponed
second
time
June 27:
BCRA vote
postponed in
Senate

14. Page 14 The Affordable Care Act (ACA) – Employer update during 2017 season of change
Better Care Reconciliation Act (BCRA):
discussion draft as released
► Better Care Reconciliation Act
► Original discussion draft as released June 22
► Revised discussion draft released July 14
► Medicaid reform: continues expansion through 2023 with
reduction in funding beginning in 2021
► Beginning 2024 sharp reduction in funding and converts to a
per capita or block grant allotment for different eligibility
categories; optional work requirement permitted
► Elimination of individual and employer mandates by
reducing tax to zero
► Continuation of ACA income-based premium tax credits
through 2019; commencing 2020:
► Converts to income and age-based tax credits
► Reduce eligibility 0% - 350% of federal poverty level (FPL)
► Benchmarks credit to bronze (58% actuarial value) plan
► Retains and modifies ACA Section 1332 waivers

15. Page 15 The Affordable Care Act (ACA) – Employer update during 2017 season of change
BCRA: discussion draft as released
(continued)
► ACA taxes and fees eliminated, except
► 3.8% tax on individuals with net investment income of
$200,000 or more ($250,000 if joint filing)
► 0.9% additional Medicare (HI) tax on individual with
earnings of $200,000 or more ($250,000 if joint filing)
► $500,000 compensation deduction limitation imposed
on covered health insurance providers
► Health savings accounts (HSAs) enhanced
► Increase in contribution limit to out-of-pocket maximum
► Use HSAs to pay High Deductible Health Plan (HDHP)
premiums in certain circumstances
► Association health plans
► Available to Professional Employer Organizations
(PEOs)

16. Page 16 The Affordable Care Act (ACA) – Employer update during 2017 season of change
Side-by-side comparison of ACA and House,
Senate provisions
Individual mandate penalty
imposed under IRC § 5000A
Reduces the IRC §5000A
penalty to zero. However,
insurers would be allowed to
impose a 30% premium
surcharge on enrollees who fail
to retain coverage for 63 days in
a 12-month period
Reduces IRC §5000A penalty to
zero. Six-month waiting period
applies for individuals who fail to
retain continuity of coverage for
63 days in a 12-month period.
Employer mandate excise tax
requires large employers to offer
coverage to full-time employees
Reduces the excise tax to zero Reduces the excise tax to zero
Premium tax credits based on
income between 100% and
400% FPL; credit benchmarked
to silver plan
Tax credit primarily based on
age; credit is fixed and would
not increase with premium
increases or higher-cost
geographic areas
Tax credit based on age and
income up to 350% of FPL;
credit benchmarked to bronze
plan
Senate proposalHouse billAffordable Care Act

17. Page 17 The Affordable Care Act (ACA) – Employer update during 2017 season of change
Side-by-side comparison of ACA and House,
Senate provisions (continued)
Cost sharing reduction (CSR)
subsidies available to individuals below
250% of FPL
CSR subsidies end in 2020; subject to
Administration’s discretion to terminate
earlier; funding for states to stabilize
the markets
CSR subsidies end in 2020; subject to
Administration’s discretion to terminate
earlier; funding for states to stabilize
the markets
No pre-existing condition health care
pricing
States option to permit insurers
to increase premiums based on
pre-existing conditions; must establish
high-risk pools
Cruz amendment would give insurer
option to offer ACA non-compliant plan
(including no pre-existing conditions),
provided also offer compliant plan
3 to 1 age rating health care pricing 5 to 1 age rating pricing; state option to
change the age rating under the waiver
provision
5 to 1 age rating pricing
Health savings account contributions
up to $3,400 for individuals and $6,750
for families
Effective 2018, health savings account
contributions for individuals up to
$6,550 and $13,100 for families
Effective 2018, increased health
savings account contributions;
enhanced use of HSA funds
Insurers required to cover the 10
essential health benefits (EHBs)
States would be permitted to define
what qualifies as an EHB
States would be permitted to define
what qualifies as an EHB
Senate proposalHouse billAffordable Care Act

18. Page 18 The Affordable Care Act (ACA) – Employer update during 2017 season of change
Polling question
What areas of the Affordable Care Act would you
most like to see Congress address?
A. Employer mandate
B. Employer reporting requirements
C. ACA taxes such as the Cadillac tax or the health insurer fee
D. Insurance market rules such as prohibition on annual and
life-time limits and dependent coverage to age 26
E. Creation of association health plans
F. None of the above / does not apply

19. State
legislative
update

20. Page 20 The Affordable Care Act (ACA) – Employer update during 2017 season of change
► Medicaid expansion/restrictions
► ACA §1332 waivers
► State premium stabilization funds
► Other emerging trends
► Single-payer system
► Employer taxes
Will states take action?

21. Page 21 The Affordable Care Act (ACA) – Employer update during 2017 season of change
State decisions on Medicaid expansion
CA CO
CT
DC
HI
KY*
MD
MA
MN
NV
NY
OR
RI
VT
WA
IA
NM
AL
AK
AZ
AR
DE
FL
GA
IL IN
ID
KS
LA
ME
MI
MS
MO
MT
NE
NH
NJ
NC
ND
OH
OK
PA
SC
SD
TN
TX
UT
VA
WV
WI
WY
State not pursuing
Medicaid expansion: 19
State-expanded
Medicaid: 31 + DC
Source: Kaiser Family Foundation, “Status of State Action on the Medicaid Expansion Decision,” as of July 7, 2016
* The Governor-elect of Kentucky announced plans to roll back the state’s expansion of Medicaid; however, to date no plans have been finalized.

22. Page 22 The Affordable Care Act (ACA) – Employer update during 2017 season of change
Section 1332 waivers
► Approved waivers
► Hawaii – approved by Obama administration
► Alaska – approved July 11, 2017
► Will receive $48 million to stabilize individual market
► Funded by expected reduction in Advanced Premium Tax Credits
(APTC) in the state market
► Plan is to have state pay back insurers for high-cost patients
► Alaska will reinsure insurers for individuals with one or more of 33
high-cost conditions
► Pending waiver
► Minnesota – submitted May 5, 2017
► Similar to Alaska
► Establishes a reinsurance fund to stabilize individual market

23. Page 23 The Affordable Care Act (ACA) – Employer update during 2017 season of change
State proposals to create single-payer
systems
New Jersey
California The Californians for a Healthy California Act (SB 562)
► Passed by the Senate on June 1, 2017
► Create a universal single-payer health care coverage program within the state
► Revenues for funding the program are raised through a new payroll tax — about 15%
of earned income
► Moved to the California Assembly, where it was blocked by the Democratic speaker
► See our alert
Healthy New Jersey Act introduced on June 5, 2017 (A4945)
► The Act would establish a single-payer health care system in the state.
► Funding would be partially derived from a progressively graduated premium tax on all
payroll and self-employed income, to be paid by employers, employees and self-
employed, in a manner similar to the Medicare tax.
► A graduated premium tax would also apply to taxable income, such as interest,
dividends, and capital gains not subject to the payroll.

24. Page 24 The Affordable Care Act (ACA) – Employer update during 2017 season of change
State proposals to create single-payer
systems (continued)
New York New York Health Act legislation proposed (A04738)
► A04738 would establish a single-payer system funded in part by premium taxes.
► Those federal funds the state currently receives for Medicare, Medicaid, Family Health
and Child Health Plus would be combined with these premium taxes in a New York Health
Trust Fund.
► The tax rates are graduated at 0%, 9%, 11%, 12% and 16%
► The legislation passed the Assembly, but died without a vote in the Senate.
► See our alert.
Oregon The Oregon Health Care For All (SB 1046)
► Introduced in April 2017
► Would establish a plan for universal health care funded through a system of dedicated
progressive taxes
► Calls for funding recommendations based on the results of a study
Rhode Island The Rhode Island Comprehensive Health Insurance Program
(H5069)
► Introduced in January 2017
► Establishes a single-payer health care system funded by collection premiums
► House Finance Committee recommended the measure be held for further study (May 24, 2017)

25. Page 25 The Affordable Care Act (ACA) – Employer update during 2017 season of change
Other interesting state proposals
Massachusetts Governor Charlie Baker has proposed to fund a $600
million MassHealth shortfall with:
► A two-year rate increase (2018–2019) in the current Employer Medical Assistance
Contribution (EMAC), offset by a two-year state unemployment insurance (SUI) rate decrease
► Employers’ EMAC taxes would increase by $200 million per year
► A SUI rate decrease is expected to save employers $335 million over the two-year period
► See our alert
Oregon SB 997
► Introduced in March 2017
► Establishes penalty on employers that offer health insurance coverage to employees but that
have employees working at least 20 hours per week who receive health care coverage
through medical assistance program
► Would cover large employers (based on the ACA Code Section 4980H definition)
► Last action was hearing in March 2017
Massachusetts
Nevada “Medicaid for All” “Sprinklecare” AB 374
► Would have directed the state to develop a program to allow individuals to buy into Medicaid
► Passed both houses of the state legislature
► Was vetoed by the Governor June 16, 2017

26. Page 26 The Affordable Care Act (ACA) – Employer update during 2017 season of change
Polling question
As new taxes and increasing health care costs continue to put
pressure on employers to reduce overall health care costs,
what steps will your organization consider or take next?
A. Reduce benefits or increase cost sharing
B. Offer only a high-deductible health plan
C. Increase use of wellness programs
D. Explore delivery system or payment reforms
E. Other
F. None of the above / does not apply

27. Employer
reaction

28. Page 28 The Affordable Care Act (ACA) – Employer update during 2017 season of change
Employers respond to ambiguity
Planning for potential scenarios – significant provisions
► Contingent worker, part-time, per diem coverage offer
considerations
► Medical Plan design changes
► Full-time employee tracking administration
Employer
mandate
elimination/
penalties at $0
► Employee education as employees seek other coverage or
become uninsured
► Employer cost increases based on higher enrollment
► Potential plan design considerations for affordable coverage,
including non-Minimum Essential Coverage (MEC) offerings
for part-time employees
► Impact of cost shifting by medical providers for increased
uncompensated care
Cutback in
Medicaid eligibility

29. Page 29 The Affordable Care Act (ACA) – Employer update during 2017 season of change
Employers respond to ambiguity
Planning for potential scenarios – significant provisions (continued)
► Employee education for loss of benefits or increased taxes
► Potential gross-ups or other compensation
► Valuation of employer provided benefits
► Increased payroll taxes for employers
Cadillac Tax or cap
on health care
exclusion
► Employee education to ensure they are aware of new
penalties for enrolling after a lapse in coverage
Premium charged if
no prior coverage
► Improve and document processes/systems to support future
employer reporting responsibilities
Reformed tax
credits

30. Page 30 The Affordable Care Act (ACA) – Employer update during 2017 season of change
Employer plans for 2018–2019 continues to
be influenced by ACA
► Employers are making plans that are influenced by ACA
► Employ or improve workforce management
► Consolidate vendors, for cost savings and/or to simplify
administration/accuracy for reporting
► Leave policy and/or administration changes
► Health plan consolidation
► Reduce or eliminate contingent workers
► Cost savings being sought through two primary activities
► Medical benefits
► System/process automation and HR system efficiency
improvements

31. Page 31 The Affordable Care Act (ACA) – Employer update during 2017 season of change
Polling question
Will you require an RCH certificate for today’s webcast?
Those with CPP or FPC professional designations
check “yes” to this question. All others check “no.”
A. Yes
B. No

32. IRS
developments
and related
reporting
matters

33. Page 33 The Affordable Care Act (ACA) – Employer update during 2017 season of change
Status of employer shared responsibility
► Looking forward
► Will the Department of Health and
Human Services or the IRS take
administrative action not to enforce
based upon previously issued
Executive Order?
► Looking back – IRS activity
► Action on employer shared
responsibility to date
► Updates to frequently asked questions
► Good faith provisions

34. Page 34 The Affordable Care Act (ACA) – Employer update during 2017 season of change
Error correction:
► IRS provides process instructions
► Limited information on what must be
corrected:
► What needs to be corrected under
good faith?
► Which errors are inconsequential?
► Limited guidance available
Taxpayer Identification Number (TIN)
solicitation:
► ACA-specific TIN solicitation rules
proposed July 2016
► Rules for reasonable cause defense to
accuracy penalties
► TIN mismatch error vs. Notice 972CG
Considerations following the 2016 reporting
season

35. Page 35 The Affordable Care Act (ACA) – Employer update during 2017 season of change
One-minute recap

36. Page 36 The Affordable Care Act (ACA) – Employer update during 2017 season of change
Learn more about US tax reform
► Replay information from previous tax reform webcasts is available at the links below.
► The Affordable Care Act: employer update during 2017 season of change
An update concerning the House consideration of the American Health Care Act
► US tax reform update
How President Trump’s tax reform principles could affect the prospects for US tax reform
► US tax reform: what does it mean for me?
Understanding the impact of tax reform on individuals
► US tax reform: a border adjusted cash flow tax?
Exploring and understanding the proposed shift to a consumption-based tax
► US tax reform: impact on state and local taxes and other indirect tax considerations
► Understanding the effects of the House Blueprint through modeling and scenario planning
► Additional webcasts on 2017 US tax reform and health care reform measures
will be scheduled as the situation warrants
► Visit us at ey.com/taxreform to get up-to-date insights on US tax reform
proposals and how they impact your business
► Follow us on twitter at @EY_Tax, @EY_USTaxPolicy and #taxreform

37. Page 37 The Affordable Care Act (ACA) – Employer update during 2017 season of change
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