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Immediately following last week's inauguration, President Donald Trump returned to the White House and signed his first executive order, "Minimizing the Economic Burden of the Patient Protection and Affordable Care Act Pending Repeal." In short, the order directs federal agencies that administer certain aspects of the Affordable Care Act (ACA) to waive or delay taxes, penalties and regulatory burdens on purchasers of health insurance "to the maximum extent permitted by law." In addition, the order is designed to provide "states more flexibility and control to create a more free and open health care market."
While the executive order does not specifically mention employers by name, the inclusion of "health insurers" and "purchasers of health insurance" could have implications for employer-sponsored health plans. ACA provisions of interest to HR professionals that may be impacted include employer reporting requirements, employer pay-or-play penalties, the transitional reinsurance fee, the Patient-Centered Outcomes Research Institute (PCORI) fee and the 40 percent excise tax on high-value employer-sponsored health plans.
Changes to the ACA regulatory scheme will not happen immediately. Trump's nominees to head the departments of Labor, Health and Human Services, and Treasury, as well as the Internal Revenue Service—agencies responsible for ACA oversight—have not been confirmed as of press time, and some of the desired changes will require the agencies to provide notice and seek public comment on any regulatory changes. As this process unfolds, existing regulations remain in place until new directives are issued.
Meanwhile, congressional action to repeal and replace the ACA is underway. As previously reported, Congress passed the fiscal 2017 budget resolution (S. Con. Res. 3). This resolution instructs committees of jurisdiction to begin drafting budget and tax reconciliation legislation, which will include specific legislative provisions to repeal the tax provisions of the ACA. The budget resolution set a drafting deadline of today, Friday, January 27. However, key lawmakers earlier this week indicated that consideration of the budget reconciliation legislation is likely to be pushed back to mid- to late-February.
Although legislative text for budget reconciliation has not yet been finalized, Republican Senators Bill Cassidy (LA) and Susan Collins (ME) introduced on Monday, January 23, an ACA replacement proposal (S. 191) titled the Patient Freedom Act of 2017 (PFA). The PFA would grant to states power to "increase access to health insurance and improve patient choice, while preserving important consumer protections." Under the PFA proposal, states would have three options: keep the ACA; adopt a different approach based on subsidized "Roth HSAs"; or reject reform efforts altogether. As with this proposal and others, SHRM remains concerned about the preservation of employer-sponsored plans and avoiding potential administrative burdens on multi-state employers.
According to the PFA's sponsors, the bill is designed to garner bipartisan support for a compromise bill. However, lawmakers from both sides of the aisle expressed dissatisfaction with the proposal soon after its introduction. As the debate to repeal and replace the ACA continues, we can expect to see many more legislative proposals introduced in the coming weeks and months.
As Congress and the regulatory agencies take action on ACA reforms, SHRM will continue to advocate in support of the employer-sponsored system. Stay tuned to future editions of SHRM's HR Issues Update e-newsletter for timely and relevant updates on this important issue for HR practitioners.
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