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Agencies in holding pattern on benefits regulations
The Trump administration's indecisive messaging on whether it will continue to pay cost-sharing subsidies for low-income individuals has thrown insurers into turmoil and could result in higher premiums for everyone if rising costs are passed on to sponsors of employer health benefit plans.
The administration is currently fighting a challenge from Congress on whether subsidies were paid legally.
If the subsidies are not paid, premiums for individuals in state exchanges and the federal marketplace could rise dramatically—as much as 19 percent, according to Kathryn Bakich, senior vice president and national health compliance practice leader with Segal Consulting, an HR and benefits consultancy in Washington, D.C. And plan sponsors might wind up having to absorb some of those cost increases due to cost-shifting by insurers from individual to group plans.
The administration hasn't acted yet because the Department of Labor still does not have an assistant secretary of labor for the Employee Benefits Security Administration, Bakich noted at the International Foundation of Employee Benefit Plans (IFEBP) Washington Legislative Update on May 22. President Trump's ban on administration officials working as lobbyists after they leave the government may be slowing the process, she said.
Are the Subsidies Legal?
Congress can appropriate funding to insurers under two different parts of the Affordable Care Act (ACA):
[SHRM members-only toolkit: Complying with and Leveraging the ACA]
Congress stopped reauthorizing subsidies during the Obama administration, but his agencies kept paying them. Congress sued Obama's departments of Health and Human Services (HHS) and Treasury, and a judge agreed that they were not authorized to keep paying the subsidies. The departments appealed the decision, and May 22 was the deadline for the parties in the litigation to file status reports in the case, said James Gelfand, senior vice president, health policy, with the Employee Retirement Income Security Act (ERISA) Industry Committee in Washington, D.C. The Trump administration has continued paying the subsidies and has committed to making subsidy payments this month but no further, The New York Times reports.
No Assistant Secretary of Labor for EBSA
The administration has paused the creation of regulations, though the departments of HHS, Labor and Treasury have ample authority to set rules that shape the health insurance markets under the ACA. The ACA states "The secretary shall" 1,442 times, indicating that the secretaries of HHS, Labor and Treasury have leeway to make changes to the law. Employer groups have been working with Congress and the administration to identify rules that could be modified or eliminated to provide relief to plan sponsors, Bakich noted.
But employers remain hopeful some of the regulatory load will be lifted. After all, the HHS states on its website that, "We are going through every page of regulations and guidance related to the Affordable Care Act to determine whether or not they work for patients and whether or not they are making our health care system better." Regulations that have been published through the public notice and comment period would have to go through the notice and comment period to be revoked, but subregulatory guidance—guidance that did not go through the public notice and comment period, such as Q&As and fact sheets—could be removed without public comment.
So far the Trump administration hasn't changed much, however, she observed. Plan sponsors have expected to see subregulatory guidance removed from the agencies' websites, but that hasn't happened, she said.
Other Questions About Benefits Regulations
Will the Trump administration enforce rules that the Obama administration put in place?
Employers are wondering whether the new administration will revoke the notice of proposed rulemaking recommending the new Schedule J on the Form 5500 (which satisfies annual reporting requirements under the Employee Retirement Income Security Act), Bakich said. Labor and the Internal Revenue Service had worked on the requirements for years, and the schedule would require voluminous reporting.
The new rules would apply to large employers that offer individuals money not to enroll in the employer's group health plan. How much of a problem is this, she asked, and will the new rules survive? Time will tell.
Now employers are also questioning whether the HHS will continue to enforce the health plan nondiscrimination rule in the new administration, according to Bakich. The HHS has shown it will go after a health plan that is discriminatory based on gender identity, she added. Last December, a Texas district court judge found that the HHS's definition of barred sex discrimination in health plans against transgender individuals was overbroad. Many plan sponsors want coverage of gender-realignment surgery in their plans. But after the court ruling, some plan sponsors that hadn't implemented this change still haven't put that coverage in their plans, she noted.
There's a war brewing between those who love the ACA and those who hate the law, Gelfand said, noting that plan sponsors' "best bet is to find a way to stay out" of the battle.
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