The Health Care Fairness for All Act overhauls federal health law by repealing ACA mandates, establishing new tax credits, reforming medical savings accounts, increasing state regulatory flexibility, restructuring Medicaid payments, and codifying hospital price transparency.
Pete Sessions
Representative
TX-17
The Health Care Fairness for All Act significantly overhauls federal health law by eliminating ACA mandates and penalties while introducing new fixed tax credits for individual coverage. It restructures medical savings by phasing out traditional HSAs in favor of Roth HSAs and removes the general deduction for medical expenses. Furthermore, the bill grants states greater flexibility in regulating insurance markets and fundamentally reforms Medicaid payments through a new beneficiary-based federal funding formula. Finally, it codifies existing rules requiring hospitals to publicly disclose their standard service charges.
ACA Mandates Repealed, New 20% Penalty Added: What the 'Health Care Fairness for All Act' Means for Your Wallet and Coverage
The “Health Care Fairness for All Act” is a massive overhaul that fundamentally rewrites the rules for how Americans get and pay for health coverage. Think of it as the federal government hitting the reset button on the Affordable Care Act (ACA), but keeping a few key consumer protections. The core of this bill is the complete repeal of the individual mandate (the penalty for not having insurance) and the employer mandate (the penalty for large employers not offering coverage), effective after December 31, 2024.
This legislation also introduces a new tax credit system, the Section 36C Health Insurance Tax Credit, and creates a tax-advantaged savings vehicle called the Roth Health Savings Account (Roth HSA). While the goal is to increase choice and affordability, the bill comes with significant fine print, including a new penalty for coverage gaps and a major restructuring of Medicaid funding for states.
The Mandates Are Gone, But the Cost of Gaps Just Went Up
For years, if you didn’t have insurance, you faced a tax penalty under the individual mandate. That’s gone. Similarly, large businesses no longer face penalties for failing to offer coverage. This is a huge win for employers looking to cut costs and individuals who felt forced to buy insurance they couldn't afford or didn't want. However, the bill introduces a serious new consequence for going without coverage: a 20 percent premium surcharge.
Under Section 121, if you try to sign up for new health insurance and you’ve been uninsured for 12 months or more, your new insurer can charge you an extra 20 percent on top of your standard monthly premium. This penalty applies for up to three times the length of your most recent coverage gap. Say you lost your job and went without insurance for 18 months; you could face that 20% premium hike for the next 4.5 years. This provision is designed to encourage continuous coverage, but it could severely penalize people—like gig workers or those between jobs—who face temporary financial hardship.
Meet Your New Tax Credit and the Roth HSA
The bill scraps the existing ACA premium tax credits (Section 36B) and replaces them with a new Section 36C Health Insurance Tax Credit, effective for tax years starting after December 31, 2025. This new credit provides a flat amount: about $333 per month for you and $167 per month for each qualifying child, assuming you all have “creditable coverage.” This credit is designed to be received in advance or deposited into a new Roth HSA.
Speaking of HSAs, the bill creates the Roth HSA (Section 201). Unlike the current HSA, contributions are made with after-tax dollars, but the money grows and is withdrawn tax-free for qualified medical expenses—a huge advantage for long-term savings. The catch? Contributions to the traditional, tax-deductible HSA are eliminated after December 31, 2025. If you’ve been relying on the tax deduction from your current HSA, that benefit is ending.
The Erosion of Benefits and the Rise of "Limited" Plans
While the bill keeps key consumer protections—like guaranteed issue, no pre-existing condition exclusions, and coverage for dependents up to age 26 (Section 121)—it rolls back a massive piece of the ACA: the requirement for Essential Health Benefits (EHB). Federal law will no longer require plans to cover EHBs like maternity care, mental health services, or prescription drugs. States can still require them, but the federal floor is gone.
This change paves the way for “limited benefit insurance,” which is explicitly defined in the bill (Section 122) as coverage that has an annual cap on payments. If you enroll in one of these limited plans and hit your cap, the bill offers a unique protection: your assets are shielded from seizure for medical debts incurred after you max out, up to the amount of the annual limit. However, the tax credit you receive for these limited plans will be reduced. This encourages the market to offer cheaper, high-risk plans that might leave consumers significantly exposed if they face a major illness.
State Flexibility and the Medicaid Overhaul
Title III grants states massive flexibility to regulate their non-Exchange insurance markets, allowing them to adjust age-based premium ratios up to 5-to-1 and waive certain ACA rules to stabilize their markets. This means what you pay for insurance could depend heavily on where you live, especially if you’re an older adult.
Title IV fundamentally changes Medicaid funding. Instead of the current system, states will receive federal payments based on a complex formula tied to beneficiary categories (e.g., elderly, children, disabled) and historical spending (Section 401). This new system is designed to cap federal exposure and encourage efficiency, but it also restricts the use of federal funds for individuals whose income is over 100% of the federal poverty line (with exceptions). States that can meet specific chronic care quality targets can earn a bonus, incentivizing better outcomes for the most vulnerable populations.
Other Changes That Matter
- Telehealth is Here to Stay: The bill makes permanent the Medicare flexibilities that expanded access to telehealth services, ensuring that remote care options don't vanish after the current emergency provisions expire (Section 124).
- Hospital at Home: Medicare will now officially cover “Acute Hospital Care at Home” programs, allowing certain inpatient services to be delivered at a patient’s residence, easing the burden on hospitals and potentially improving patient comfort (Section 145).
- Medical Expense Deduction Ends: Starting in 2026, the ability to deduct qualified medical expenses that exceed 7.5% of your Adjusted Gross Income (AGI) is eliminated, except for long-term care premiums (Section 202). This means you lose a significant tax break if you have high out-of-pocket medical costs.
This Act is a dramatic shift that trades federal mandates for state flexibility and personal savings incentives. While it offers relief to employers and increases choice, it places a heavy emphasis on personal accountability for maintaining continuous coverage and saving via Roth HSAs, while potentially exposing consumers to leaner, limited-benefit plans.