On October 12, 2017, President Trump issued an Executive Order directing the Departments of Labor (DOL), Health and Human Services (HHS), and Treasury to develop new rules to allow some exemptions from the ACA – Affordable Care Act.
The Order indicates the Administration’s priorities although it has no immediate effect since any rule changes must first go through a long proposal, review, and public comment process.
The Order’s key directives are:
1. Consider expanding the time period allowed for short-term limited duration insurance (STLDI).
By excluding pre-existing conditions and restricting the scope of covered services, STLDI policies typically offer lower premiums. STLDI policies are already exempt from many of the ACA’s requirements, but are generally limited to three-month coverage periods. Changing the federal rules may allow greater availability for longer coverage periods, although state insurance laws will also need to be considered.
2. Consider allowing employer-funded Health Reimbursement Arrangements (HRAs) to reimburse their employees’ premiums for individual medical insurance.
HRAs allow employers to make tax-free contributions to account plans that reimburse employees for eligible healthcare expenses, such as group medical deductibles and co-pays. The ACA currently prohibits employers (other than certain small employers) from paying or reimbursing an employee’s individual policy premiums either directly or through an HRA. This prohibition could be revised or eliminated by changing the current federal rule.
3. Consider loosening restrictions on association health plans and expand availability across state lines.
Association health plans are designed to cover members of professional and trade groups. Generally they are exempt from some of the ACA requirements and state insurance laws that apply to typical “small employer” group health plans. Expanding the availability of association health plans, which generally offer less coverage at lower costs, would likely require changing how group plans are defined under the Employee Retirement Income Security Act (ERISA). Also, state insurance laws, particularly in states that are wary of association health plans, may limit the impact of any federal rule changes.
We will continue to monitor developments as the federal regulatory agencies consider rule changes. In the meantime, all current ACA requirements and state insurance laws continue to apply.