Healthcare Overhaul Bill Axes Mandates, Rolls Back Key ACA Rules, and Introduces New Tax Credits & Roth HSAs

The "Health Care Fairness for All Act" proposes a sweeping redesign of the American healthcare landscape. Effective for months after December 31, 2024, it eliminates the individual requirement to have health insurance (Section 101) and, for months beginning more than 30 days after enactment, removes the employer mandate to offer coverage (Section 102). The bill aims to shift significant regulatory power over health insurance back to the states, largely reverting federal rules to those existing before the Affordable Care Act (ACA), while introducing new tax benefits and savings account structures.

Insurance Rules Rewritten: Mandates Out, State Power In

This legislation fundamentally alters the health insurance market. By repealing the individual and employer mandates (Sections 101, 102), the bill removes the ACA's core mechanisms for encouraging broad insurance coverage. While certain ACA consumer protections like the ban on pre-existing condition exclusions (Section 2704 of PHSA, as retained by SEC. 121), coverage for dependents up to age 26 (Section 2714 of PHSA, as retained by SEC. 121), and no lifetime/annual limits (Section 2711 of PHSA, as retained by SEC. 121) are kept, many other federal requirements are rolled back. States gain considerable flexibility; for instance, they can allow premium variations based on age by a ratio of up to 5-to-1 (SEC. 121) and are no longer federally required to enforce ACA's essential health benefits (SEC. 121), though they can choose to do so. This means the type and comprehensiveness of insurance plans could vary significantly from state to state. If you live in a state that opts for minimal requirements, your 'basic health insurance' (defined by the state under SEC. 122) could offer very different coverage than in a neighboring state.

A new provision introduces a potential sting for those without continuous coverage: a late enrollment penalty. If you've gone without "creditable coverage" for 12 consecutive months, insurers can hike your monthly premiums by 20% for each of those uninsured years, for a penalty period up to three times as long as your coverage gap (SEC. 121). Imagine losing your job and coverage for a year; when you go to buy a new plan, you could face a 20% higher premium for the next three years. States can apply for waivers to implement alternative incentives (SEC. 121).

Your Wallet & Your Health: New Tax Credits and Savings Accounts

Starting in 2026, the bill introduces a new "health insurance tax benefit" (SEC. 131, creating IRC Section 36C). This provides a tax credit of up to $4,000 annually for an individual and $2,000 per child under 15, intended for HSA contributions or insurance premiums. However, this credit comes with strings. If your employer's contribution to your health coverage (the "employer-provided health insurance tax subsidy") is more valuable than this credit, your taxes could actually increase by the difference. This is a crucial detail for anyone with employer-sponsored insurance to watch.

The bill also phases out tax-deductible Health Savings Accounts (HSAs) after December 31, 2025, and introduces Roth HSAs (SEC. 201, creating IRC Section 530A). Contributions to Roth HSAs (up to $5,000 for self-only, $5,000 per person for family coverage, with an extra $1,000 for those 55+) won't be tax-deductible upfront, but qualified medical expense withdrawals will be tax-free. Alongside this, the medical expense deduction from your income taxes is eliminated for taxable years after December 31, 2025 (SEC. 202), except for long-term care premiums. This shift could impact how families budget for significant medical costs, especially if they relied on the deduction to offset large out-of-pocket expenses.

States also get a new option for their Medicaid populations: they can allow Medicaid recipients to enroll in private plans qualifying for the new tax credit, depositing the difference between the credit and the plan cost into an HSA for the individual (SEC. 133). Unused tax credits under Section 36C within a state can also be pooled and granted back to the state for indigent healthcare (SEC. 132).

Medicare & Medicaid Makeover: Changes for Seniors and State Programs

Medicare sees several reforms. The bill promotes "site-neutral payments" (SEC. 143), aiming to pay the same amount for the same service regardless of whether it's performed in a hospital outpatient department or a doctor's office, effective January 1, 2026. This could affect hospital revenue and potentially lower costs for some services. Physician-owned hospitals would see restrictions imposed by the ACA repealed (SEC. 141). The current COVID-19 era telehealth flexibilities are made permanent (SEC. 124), meaning continued access to remote doctor visits for many Medicare beneficiaries. Additionally, Medicare Advantage plans will be able to contribute to Roth HSAs for chronically ill enrollees (SEC. 144), and acute hospital care at home waiver flexibilities are extended (SEC. 145).

Medicaid payments to states are significantly reformed starting July 1, 2022 (SEC. 401, adding Section 1903A to Social Security Act). The new system uses an "aggregate beneficiary-based amount" adjusted for categories of beneficiaries (elderly, disabled, children, other adults) and includes a potential "chronic care quality bonus." This data-driven approach could change how states receive federal Medicaid dollars, with a 75% federal share (or higher based on state FMAP). States will also have an option to receive Medicare payments for dual-eligible individuals if they cover all services under both programs and pay providers at least the Medicare rate.

Price Tags on Procedures: Hospital Transparency Mandated

Finally, the bill reinforces hospital price transparency by mandating that hospitals publicly disclose their standard charges, as required by the HHS rule published on November 27, 2019 (SEC. 501). This aims to give patients a clearer picture of costs before receiving care, though the real-world impact on actual prices paid will depend on how effectively this information can be used by consumers.

Overall, the "Health Care Fairness for All Act" represents a significant departure from current healthcare law, emphasizing state control, individual financial responsibility through HSAs and tax credits, and market-based approaches. The real-world effects will likely vary widely depending on individual circumstances, employer choices, and how each state decides to implement its new flexibility.