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On January 20, President Donald Trump issued an executive order titled "Minimizing the Economic Burden of the Patient Protection and Affordable Care Act Pending Repeal." The order directed federal agencies to minimize regulatory burdens of the Affordable Care Act (ACA) wherever possible. Following up on his initial action, Trump signed on October 12 another health care executive order.
Specifically, this executive order proposes to allow small employers to band together through an association health plan (AHP) to buy health insurance across state lines. Regulations currently stipulate that members of an association health plan must be in the same industry and must be involved in the day-to-day decisions of a business. Current law allows businesses that have employees in several states to buy insurance across state lines. This executive order also directs the U.S. Department of Labor to modernize its current interpretation of the Employee Retirement Income Security Act (ERISA), to allow the formation of AHPs. The executive order would also allow people to buy low-cost, short-term health insurance plans (currently limited to three months) and proposes to expand the use of health savings accounts.
The executive order is likely to have little effect on midsize to large employer-sponsored health benefits. Small employers, on the other hand, may have expanded ability to offer insurance to their employees through AHPs or have the ability to offer money through a health reimbursement arrangement (HRA) that employees can use to purchase health services. The idea of expanding HRAs is not new. The 21st Century Cures Act, which President Barack Obama signed in 2016, included an exemption for small employers to offer stand-alone HRAs to employees that have purchased a health plan in the individual market as long as certain conditions are met. SHRM fully supports the repeal of the restrictions on the use and limitations on contributions to HSAs and flexible spending accounts.
Furthermore, while the executive order does not dictate changes in the law impacting health care, it directs agencies to issue new regulations and guidance that could. This means that any proposed regulations would have to comply with the public notice and comment process required by the Administrative Procedure Act, which requires publication in the Federal Register and a period for public comment. The notice and comment period for such actions would likely take months to complete before any regulatory action would take effect.
SHRM will thoroughly review the executive order and will provide feedback to the respective agencies during the notice and comment period. SHRM will continue to advocate for proposals that support and strengthen employer-provided health care coverage, including the preservation of ERISA, which allows for common benefit plans across state lines.
Meanwhile, on the congressional front, Representatives Diane Black (R-TN) and Mike Thompson (D-CA), along with Senators Rob Portman (R-OH) and Mark Warner (D-VA), introduced on October 3 the Commonsense Reporting Act (H.R. 3919 and S. 1908, respectively). This SHRM-supported bipartisan legislation proposes to streamline and modernize the employer and individual reporting requirements under the ACA.
Under the ACA's reporting requirements (code sections 6055 and 6056), employers and insurance carriers are required to gather monthly data and report it annually to the Internal Revenue Service (IRS) and their employees. The information reported is intended to verify compliance with the individual and employer mandates of the ACA and to administer advanced premium tax credits and cost-sharing subsidies under the state- and federal-facilitated insurance exchanges. These reporting requirements have proven to be an administrative and financial burden on employers. According to SHRM's recent health care survey, 62 percent of HR survey respondents said reporting requirements were their biggest challenge related to the ACA. Furthermore, 66 percent of respondent organizations reported that they outsourced at least some of the ACA information reporting requirements. Under the law, employers that are unable to file or furnish the IRS forms run the risk of incurring significant financial penalties.
Specifically, the Commonsense Reporting Act is designed to ease the ACA reporting requirements for employers by:
The Commonsense Reporting Act was introduced in previous Congresses. It has bipartisan support and is likely to be considered in the current Congress if lawmakers look for a path forward on health care and/or look for ways to shore up the exchanges under the ACA.
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 HR Issues Update for timely and relevant updates on this important issue for HR practitioners.
LATE BREAKING NEWS: Early this morning, President Trump announced that he will not continue federal subsidies (known as cost-sharing reduction payments) to insurance companies that reduce health care costs for low-income enrollees. As previously reported, Senators Lamar Alexander (R-TN) and Patty Murray (D-WA) are attempting to reach a bipartisan, legislative agreement to stabilize the ACA markets. The Administration's decision will escalate negotiations when Senators return to Washington, DC next week. In the meantime, SHRM and others in the employer community sent a letter to Congress in August urging the continued funding of the subsidies.
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