Congress has handed, and the President has signed, the Inflation Discount Act of 2022. Whereas the laws largely focuses on local weather change mitigation and deficit discount, a number of provisions are of curiosity to group well being plan sponsors and their advisors. Listed below are highlights:
Enhanced Premium Tax Credit score. The favorable premium tax credit score guidelines adopted within the American Rescue Plan Act (ARPA) will now stay in impact by means of 2025. As background, the Inexpensive Care Act (ACA) created a refundable premium tax credit score, which is offered on a sliding-scale foundation for people and households who’re enrolled in an Trade well being plan and who aren’t eligible for different qualifying protection or inexpensive employer-sponsored medical insurance plans offering minimal worth. ARPA expanded the ACA premium tax credit score for taxable years 2021 and 2022 (see our Checkpoint article). The ACA limits the credit score to taxpayers with family revenue between 100% and 400% of the federal poverty line who buy insurance coverage by means of an Trade. ARPA eradicated the higher revenue restrict for eligibility and elevated the quantity of the premium tax credit score by lowering, in all revenue bands, the proportion of family revenue that people should contribute for Trade protection. The adjusted share ranges from zero to eight.5%. [EBIA Comment: Indexing was to have resumed in 2023, with the percentage set to range from 1.92% to 9.12% (see our Checkpoint article). The brand new laws supersedes the beforehand launched indexing changes, which as an alternative will proceed to vary from zero to eight.5% by means of 2025.]
Medicare Prescription Drug Value Reductions. A number of price discount measures will profit enrollees in Medicare Half D prescription drug protection. Starting in 2023, cost-sharing for insulin will likely be capped at $35 monthly. Annual Half D out-of-pocket prescription drug prices will likely be capped at $2,000 beginning in 2025. For the primary time, HHS will likely be approved (and required) to barter sure Medicare drug costs with producers starting in 2026. And, beginning in 2023, producers should pay Medicare a rebate if common costs of sure medication enhance quicker than inflation. [EBIA Comment: Because the legislation does not include comparable prescription drug cost reductions for private plans, there is some concern that reduced costs for Medicare enrollees will result in increased costs for employer plans and participants as price increases are shifted to private plans to make up for lost revenue.]
Insulin-Associated HDHP Secure Harbor. The laws amends Code § 223 to offer that plans won’t lose their HDHP standing by cause of failing to have a deductible for sure insulin merchandise. This provision is efficient for plan years starting after December 31, 2022. [EBIA Comment: The provision codifies and expands IRS guidance that allows HDHPs to provide insulin on a no-deductible or low-deductible basis under specified circumstances without adversely affecting HSA eligibility (see our article).]
EBIA Remark: Though this sweeping laws doesn’t straight have an effect on group well being plans, plan sponsors, advisors, and directors shouldn’t lose sight of potential oblique impacts. As an illustration, as a result of relevant giant employers (ALEs) doubtlessly face shared duty penalties if full-time staff obtain premium tax credit, expanded eligibility for the credit may enhance penalty publicity for ALEs that don’t supply inexpensive, minimum-value protection to all full-time staff. As well as, the advance to Medicare Half D drug protection might have an effect on the evaluation of whether or not employer-sponsored prescription drug protection is “creditable,” i.e., at the least pretty much as good as customary Half D prescription drug protection. For extra info, see EBIA’s Well being Care Reform handbook at Sections XXI.G (“Premium Tax Credit”) and XXVIII (“Shared Accountability for Employers (Play or Pay Penalty Tax)”), EBIA’s Group Well being Plan Mandates handbook at Part XXV (“Medicare Half D: Creditable Protection Disclosures”), and EBIA’s Shopper-Pushed Well being Care handbook at Part X (“HSAs: Required HDHP Protection”).
Contributing Editors: EBIA Employees.