Employers are still recovering from Affordable Care Act mandate whiplash following President Donald Trump’s Jan. 20 executive order relating to the ACA’s repeal and replacement.
The order is broadly drafted with no specifics about which aspects of the law it is targeting and has no immediate effect on employers and no clear next steps for the interim.
In short, the order directed the Department of Health and Human Services, among others, to exercise all available authority to delay the implementation of any provision of the ACA that would impose any fiscal burdens.
Employers are not among those explicitly listed as requiring protection from regulatory burdens, only leading to more confusion on what they should do when planning for the next open enrollment season — and the next four years.
Trump also issued a freeze order postponing any new regulations that have not taken effect, withdrawing any regulations not yet published, and placing restrictions on any new regulations sent for consideration. A lot to digest for any single HR professional with no discernable outcome in sight.
So what’s next? What do employers need to know? The short answer is, we don’t know. But Trump has repeatedly stated his replacement plan would provide insurance for everyone at a lower cost. “Lower cost” has been simultaneously described as lower premiums, lower deductibles and lower out-of-pocket expenses.
Those descriptions are seemingly at odds.
The long answer: What’s next depends on which items in several health care reform proposals, or a combination of them, make it to a final proposal. Based on what’s been said so far, five proposals stick out as reform targets:
- 2015 Reconciliation Bill.
- Patient Freedom Act of 2017.
- A Better Way Act.
- Expanded and Improved Medicare for All Act.
- Empowering Patients First Act.
Among these five proposals, there are several common themes with slight variations to each. Some recommend the repeal of portions of the ACA, while others offer replacement plans. Employers can stay on top of the changing ACA landscape by keeping an eye on reform proposals that address the following:
With individual mandates, it’s not likely there will be an immediate repeal of the exchange program due to the number of covered individuals who would be without coverage. However, a potential modification of the premium tax subsidy is expected and could be replaced by some type of tax credit, but employers may not see this for at least the next two years.
The elimination of the pay or play components of IRC 4980H is likely. This could include no longer requiring minimum essential coverage, offering affordable coverage or meeting minimum value requirements. Another employer favorite, ACA reporting, is unlikely to be eliminated and more likely to be replaced with more simplified reporting, with proposals introducing the idea of “continuous coverage.”
The various coverage components of ACA are all under scrutiny, including, but not limited to: cost limitations, preventive care, pre-existing condition exclusions, coverage for dependent children up to age 26, limitations on waiting periods, definition of full-time employee, and purchasing coverage across state lines. No coverage components are guaranteed a place in the new administration, and many are expected to be tossed out when new sanctions are put in place.
The so-called Cadillac tax has seen a lot of air time, resulting in a delay until 2020. Many expect that there will be more attention given to either a repeal or replacement with some type of cap on the taxability of employer provided health coverage. Some even predict there will be an inclusion of health FSA benefits in the calculation of the Cadillac tax.
HRAs, HSAs and FSAs
Health reimbursement arrangement plans have already seen several changes with the introduction of the 21st Century Cures Act, permitting small employers to adopt an HRA that can be used to pay individual plan medical premiums. It would be no surprise to employers if additional HRA plan design flexibility is introduced.
Similarly, health savings accounts appear to be popular in many proposals and an expansion of those plans is likely, including increased contribution limits, reducing the current excise tax for distributions and modifying the eligibility rules. Some proposals have a whole host of recommendations, ranging from changing some of the restrictions on flexible spending accounts to the prohibition on over-the-counter reimbursement without a prescription.
Maintaining the status quo
For now, employers are still obligated to comply with all ACA provisions, and there are many benefit changes that were part of the ACA that employers may not want to undo. Employers may still want to offer coverage to dependents up to age 26 or continue without pre-existing condition rules. Each of the 400-plus ACA components will have to be evaluated individually in order to determine what benefits make sense to keep. No easy feat.
From an employer perspective, until further regulatory guidance is released, the final regulations implementing the employer mandate and its reporting requirements remain in effect. Now that Trump has taken initial action on the ACA, it may ease the pressure on Congress. But only time will tell.
Sheryl Simmons is the chief human resources officer for Chicago-based employee health and benefits company Maestro Health.