The enhanced Affordable Care Act (ACA) premium tax credits that were enacted during the COVID epidemic lock-down expire at the end of 2025. Efforts to extend them, and other expiring health insurance rules, could drive a new tax bill this fall.

Also driving the potential for a health-centered tax bill could be a bipartisan desire to address problems with pharmacy benefits managers (PBMs), upcoding in Medicare, and a desire to revisit the Medicaid cuts enacted last month in the tax/spending cuts reconciliation bill, H.R.1. The effort could also allow Republicans to revive the House-approved individual choice health reimbursement arrangements (ICHRAs) improvements (CHOICE health arrangements) that were dropped from the House version of the just-enacted tax cuts and spending reconciliation bill.

The House-passed budget reconciliation bill included a new two-year tax credit for employers that enroll their workers in an enhanced version of ICHRAs, which House lawmakers called CHOICE arrangements. The credit would be equal to $100 multiplied by the number of months for which each employee is enrolled in a CHOICE program in the first year, and $50 by the number of months each employee is enrolled in the program in the second year.

House lawmakers view CHOICE arrangements as a type of health reimbursement arrangement (HRA) that allows applicable large employers (ALEs) to offer employees tax-free funding for individual health insurance premiums and qualified medical expenses. The coverage chosen by the employee must provide minimum essential benefits, as defined by the ACA, although the health insurance purchased need not come from an ACA exchange.

Prospects: There is momentum building towards a year-end package to address expiring health rules. Politically, lawmakers from both parties are concerned about projections that 14 million or more individuals could lose health insurance coverage as a result of the H.R.1 Medicaid cuts and expiration of the ACA enhanced premium tax credits. Reining in PBMs and cutting out what some call overpayments by Medicare, especially with respect to Medicare Advantage, are also goals of many lawmakers. However, it is still too soon to tell just how expansive a package Congress could agree on—or if there could be enough bipartisanship for Congress to agree on any health-driven package. But if such agreement does develop, expect provisions on ACA premium tax credits, Medicare upcoding, Medicare Advantage changes, new PBM rules, and possibly a revival of CHOICE arrangements..

NAIFA Staff Contacts: Jayne Fitzgerald – Director – Government Relations, at jfitzgerald@naifa.org; or Mike Hedge – Senior Director – Government Relations, at mhedge@naifa.org.