Affordable Care Act: Likely Changes Which Will Impact Employers. Mary Bauman

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1 Affordable Care Act: Likely Changes Which Will Impact Employers Mary Bauman

2 2 The materials and information have been prepared for informational purposes only. This is not legal advice, nor intended to create or constitute a lawyer- client relationship. Before acting on the basis of any information or material, readers who have specific questions or problems should consult their lawyer.

3 3 Executive Order

4 Executive Order January 20, 2017 Executive Order Section 2 authorizes the Secretary of HHS and heads of other executive departments and agencies To waive, defer, grant exemptions from, or delay the implementation of a cost, fee, tax, penalty or regulatory burden under the ACA which would impact individuals, health insurers, purchasers of health insurance, etc. 4

5 Executive Order Section 2 does not specifically mention employers as beneficiaries of this relief but purchasers of health insurance could include employers There is no specific mention of employer- sponsors of self- funded group health plans 5

6 Executive Order The Executive Order: Conveys the Trump s administration s intent to appeal and replace the ACA as soon as possible Grants discretion to executive departments and agencies to not enforce or delay enforcing the ACA (once leaders take office and to extent permitted by law) Confirms the Trump administration s goal to allow the sale of health insurance across state lines 6

7 Executive Order This Executive Order does not: Relieve employers from complying with any of the ACA requirements with respect to employer- sponsored group health plans Waive the excise tax under employer- shared responsibility provisions of the ACA (the pay or play penalty) Relieve employers from the required reporting for 2016 W- 2 and pay or play (generally fulfilled by IRS Forms C and C) which are due in the first quarter of

8 8 Possible Legislative Proposals

9 Repeal and replace? Total Repeal Need filibuster- proof Senate majority of 60 to repeal GOP majority is 52 Speculation that any repeal legislation would have a delayed effective date to provide time to enact a replacement plan 9

10 Replace Only need simple majority of 51 in Senate to make changes through budget reconciliation But only ACA changes which affect revenues or expenditures can be made through budget reconciliation Budget reconciliation can t change certain provisions - prohibition on annual and lifetime dollar limits, ban on pre- existing condition exclusions, dependent child eligibility until age 26 Trump unlikely to want to repeal these politically popular ACA provisions anyway 10

11 Trump proposals Eliminating individual mandate penalty What will happen to exchanges? Will premium tax credits and subsidies be reduced or eliminated? What will be the replacement plan to ensure all individuals have access to coverage? Will the guaranteed coverage be affordable for most? All? 11

12 Allowing health insurance to be purchased across state lines If policy approved by regulators in one state it may be sold in other states Providing full tax deduction for purchase of individual insurance policies Making HSAs more attractive Tax- free contributions in all circumstances Increase contribution limits Expand tax- free distribution rules definition of dependent Transfer balance to estate upon death with no penalty 12

13 Promoting more price transparency from health care providers Making block grants to states for Medicaid Roll back Medicaid expansion? Permitting patients to purchase drugs from foreign countries 13

14 Ryan proposals Eliminating individual mandate penalty Replace premium tax credit for low income individuals to obtain exchange coverage with advanceable, refundable tax credit which can be used to buy broader range of insurance plans Buy insurance across state lines If cost of insurance is less than credit, deposit balance in HSA like account 14

15 Require insurers to allow individuals to enroll at least annually and upon qualifying events and cap premiums at standard rates following a qualifying event Maintain state high risk pools for individuals with serious health conditions to obtain coverage Decrease subsidization of older individuals premiums by younger individuals by changing age rating ratios from 3- to- 1 to 5- to- 1 15

16 Making HSAs more attractive Allow spouse to also make catch- up contributions Allow HSA to reimburse qualifying expenses incurred shortly before HSA established Increase maximum contribution limits to align with maximum combined deductible and out- of- pocket limits Provide more power to states to deliver Medicaid programs Block grants or per capita allotment funding 16

17 Allow small employers to pool together to offer health coverage Affirm the ability of employers to self- fund and obtain stop loss coverage, including captive arrangements Reform Medicare Combine Parts A and B Cap individual out- of- pocket costs 17

18 Introduce Medicare premium support program Individuals receive financial assistance to purchase coverage from a number of options Purpose of multiple options is to provide choice and increase competition Lower income individuals would receive more financial assistance than wealthier individuals 18

19 Promote employer wellness programs Roll back new ADA and GINA regs in favor of HIPAA/ACA rules only? Medical malpractice liability reform 19

20 Other proposals? Repealing the employer mandate (pay or play penalty) Alternatively, modify definition of FT from 30 to 40 hours/week Simplify reporting Modifying or eliminating the Cadillac Tax Delay Modify remove HSAs and FSAs from consideration Repeal Find replacement revenue source Ryan s plan would cap employer deduction for group health coverage 20

21 Broadening the rules for HRAs and FSAs Increase FSA contribution limit Permit tax- free reimbursement of more expenses OTC drugs 21

22 The Trump administration is also likely to weaken the ACA through not enforcing regulations, discontinuing regulation projects in the pipeline and not defending court cases challenging the ACA Proposed 5500 regulations Project to issue Cadillac Tax regulations Regulations regarding impact of opt- out on affordability Nondiscrimination regs for fully- insured health plans Guidance on employer purchase or reimbursement of individual policies for employees 22

23 Contraceptive coverage Transgender health benefits 23

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