Dive Brief:
- President Donald Trump issued an executive order Thursday directing several executive branch departments to issue regulations and/or guidance making it easier for individuals and employers to take advantage of certain healthcare insurance and coverage options.
- Of particular interest to employers in that broad order are two directives: 1) Expand access to association health plans; and 2) Expand the "usability" of Health Reimbursement Arrangements (HRAs). Those changes offer greater flexibility to employers under current regulations, according to Axios, but the details are still vague and employers may run into ACA compliance problems should they choose those options.
- Implementation of the executive order will depend on proposals from relevant executive departments moving forward, including the U.S. Departments of Labor (DOL), Health and Human Services (HHS), and the Treasury, sources told HR Dive.
Dive Insight:
Unable to score a major legislative victory with the defeat of the Better Care Reconciliation Act (BCRA) in the U.S. Senate, the Trump administration has decided to undercut as much of the ACA as it possibly can.
The executive order has made for a noisy discussion in healthcare circles, but employers are unlikely to make any changes, given that executive departments still must weight in. As it stands, the expansion of association health plans would supposedly make coverage cheaper for some small businesses, Shandon Fowler, Principal of Four8 Insights, told HR Dive.
"President Trump’s order appears to be expressly made to benefit a key GOP constituency ― well-to-do small-business ‘job creators’ and self-employed individuals who did not qualify for Obamacare subsidies," Fowler said. "These individuals have seen the worst of the individual and small-group premium increases over the past two years and could certainly use new options, but the jury is out on whether Trump’s Executive Order is the right approach.”
Association plans allow those small businesses who are normally subject to small-group ACA rules to avoid them, in short. But those plans also risk causing a "race to the bottom," whereby those businesses offer plans that don't provide much in the way of coverage other than for catastrophic occurrences, Fowler said, especially if groups of employers with mostly young, healthy employees are able to pool together.
For larger employers, the directive around HRAs could prove to be a game-changer, but this depends on how the president's order is implemented. Steve Wojcik, VP of Public Policy for National Business Group on Health, says more flexible HRAs might be especially crucial to expanding coverage for some employees.
"Currently, employers may not offer stand-alone HRAs, accounts not offered in conjunction with coverage, to employees," Wojcik told HR Dive. "Depending on how the regulations and guidance are written, they may make it easier for employers to help employees who are not offered or ineligible for coverage pay for health care expenses."
Eric Schillinger, an employee health and welfare benefits attorney with Trucker Huss, said the most significant change for employers included in the order is the option to allow HRAs to pay individual insurance premiums. "Employers can now use these arrangements to replace their major medical plans," Schillinger said, "which are much costlier from administrative and compliance standpoints."
In any case, employers should await the specifics from federal agencies. The executive order is sure to meet legal challenges in advance of implementation, and employers should have a chance to offer their input via the ensuing public commentary period. The main benefits focus at this point in the year should be following through on open enrollment strategy for health plan offerings in 2018.
