President Trump’s Executive Order titled “Promoting Healthcare Choice and Competition Across the United States” seeks to reform certain aspects of the Affordable Care Act (“ACA” or “Obamacare”) by Executive Agency action rather than Congressional legislation. It takes specific aim at three areas:
1). Expanding small employer access to association health plans;
2). Extending the availability and duration of Short-Term Limited Duration Insurance coverage; and
3). Removing the current bar on employees using employers’ Health Reimbursement Arrangements to purchase individual health insurance.
Note that any such change requires action by various federal agencies, either by rulemaking or written guidance or both. Still, the Executive Order represents the most definitive action by President Trump to date to unwind Obamacare.
Association Health Plans
The Executive Order directs the Secretary of Labor to propose new regulations or issue written guidance within 60 days that expands the conditions under which a group of employers can meet the “commonality of interest” requirements under an ERISA Multiple Employer Plan. To date, Department of Labor (“DOL”) Advisory Opinions have defined narrowly such commonality of interests. Some approaches under consideration would allow small employers to join with employer groups on the basis of common geography or industry and do so across state lines. Other approaches include exempting self-funded Association Health Plans from certain state-mandated benefit requirements while also requiring certain minimum solvency standards. Allowing self-employed individuals to also participate in such Association Health Plans is also under consideration.
Short-Term Limited Duration Insurance (“STLDI”)
Short-term, limited-duration insurance is a type of health insurance coverage designed originally to fill temporary gaps in coverage when an individual is transitioning from one plan or coverage to another plan or coverage. Such insurance is exempt from the ACA’s ban on pre-existing condition exclusions and prohibitions on lifetime and annual limits for essential coverage. In Final Regulations effective December 30, 2016, the previous 12-month duration for STLDI plans was shortened to three months. The Executive Order directs the Secretaries of the Treasury, Labor, and Health and Human Services to propose regulations and/or issue written guidance lengthening the duration of such coverage and allowing for renewal by consumers.
Expanding Health Reimbursement Arrangements
Health Reimbursement Arrangements permit employers to fund medical care expenses for their employees on a pre-tax basis. Such arrangements must be funded solely by employer contributions and can only be used to reimburse an employee for actual medical care expenses up to a certain maximum dollar amount. The Executive Order directs the Secretaries of the Treasury, Labor, and Health and Human Services to propose regulations and/or issue written guidance within 120 days to, among other things, allow such employer contributions to be used to pay for health insurance premiums on the individual market.