In one of his first actions after taking office, President Trump issued an executive order instructing executive departments and agencies to exercise the maximum legal authority to “waive, defer, grant exemptions from, or delay the implementation” of the Affordable Care Act. This order comes on the heels of recent congressional action. Specifically, on January 13th, Congress approved a budget resolution instructing congressional sub-committees to draft repeal legislation before January 27th through a process known as “reconciliation.” The reconciliation process can be achieved without the votes of Democrats in the Senate, but the process has significant limitations - reconciliation allows only the Act’s tax and expenditure provisions to be repealed. Effectively, this means that more substantive repeal and replacement would have to occur later and require some support from Democrats in the Senate.
In tandem, the foregoing actions leave employers, wage earners and insurers with a host of unanswered questions. For example:
- How do employers comply with their coverage obligations under the employer mandate? Does the executive order mean that penalties will not be enforced against employers for failing to offer health care coverage to “full time” employees as defined by the employer mandate?
- In a similar vein, should employers comply with the Act’s reporting requirements, under which employees and the IRS must be provided with certain information about offers of health care coverage? Employee reporting requirements have already been delayed until March. Will the reporting deadlines be delayed further in the coming weeks?
- The imposition of taxes on high wage earners that were previously authorized by the Act are now in doubt. Will the 3.8% tax on “net investment income” and the .9% additional Medicare tax on wages be imposed during 2017 and beyond?
- For individuals with medical coverage through their employer or through an exchange, it is likely that coverage will remain in place at least throughout 2017. However, for individuals changing jobs or switching coverage mid-year, will they be able to secure coverage consistent with the Act’s market reforms? And beyond 2017, what will become of the more popular aspects of the Act’s consumer protection reforms, such as elimination of lifetime maximums and the requirement that dependent coverage last until age 26?
At this point, there are too many uncertainties to provide definitive answers to the questions above. However, we expect some clarity in the coming weeks as the new administration settles into office.