This is the one hundred and fifth issue in our series of alerts for employers on selected topics on health care reform. (Click here to access our general Summary of Health Care Reform and other issues in this series.) This series of Health Care Reform Management Alerts is designed to provide an in-depth analysis of certain aspects of health care reform and how it will impact your employer-sponsored plans.
Within hours of his inauguration, President Trump issued an Executive Order labeled “Minimizing the Economic Burden of the Patient Protection and Affordable Care Act Pending Repeal”. As described in greater detail below, the immediate impact of this executive order is uncertain and affected parties would be best advised to await further guidance before reacting to the order.
Executive Order and Impact
The Order’s broad directive could be viewed in many ways as an extension of the President’s campaign promises to minimize the burden of ACA regulations pending the law’s ultimate repeal.
In some respects, the Order sows greater confusion than it provides clarification. Notably, unanswered questions include:
- Does this directive imply a complete or partial enforcement hiatus?
- Was the absence of reference to employers/businesses intentional or inadvertent?
- How quickly can the relevant agencies (notably, HHS, IRS and DOL) react to this directive with more meaningful guidance, considering many of the incoming heads of those agencies will not be confirmed for several weeks?
- Does the Order provide any relief to employers who are preparing Form 1094/1095-C tax filing forms due in roughly one month?
The Executive Order directs regulatory agencies to “exercise all authority and discretion available to them to waive, defer, grant exemptions from, or delay the implementation of any provision or requirement of the Act that would impose a fiscal burden on any State or a cost, fee, tax, penalty, or regulatory burden on individuals, families, healthcare providers, health insurers, patients, recipients of healthcare services, purchasers of health insurance, or makers of medical devices, products, or medications.”
In the absence of more explicit agency guidance or Congressional action, the Order, in and of itself, does not appear to offer any specific relief from penalties to employers, individuals or other affected parties. So employers who decide to disregard existing agency guidance proceed at their own risk based on certain presumptions.
With regard to the most pressing issue for many employers -- Form 1094/1095-C filing -- we recommend that until official guidance from the IRS indicates otherwise, employers should assume that the current filing deadline continues to apply.
The Order may pave the way for future agency actions, such as non-enforcement policies, filing extensions, hardship waivers, etc. It is difficult to anticipate precisely what form such actions may take, but agencies are generally bound by the terms of the governing statute as well as the final regulations published through the notice-and-comment rulemaking process. That said, there is precedent for use of discretion to announce a delay in enforcement (e.g., the unilateral delay of enforcement of the “employer mandate” from 2014 to 2015).
Patient Freedom Act of 2017
Earlier today, Senators Susan Collins (R-Maine) and Bill Cassidy (R-Louisiana) introduced one of what will likely be many “replacement” options for the Affordable Care Act. Sens. Collins and Cassidy were undoubtedly attempting to quell some of the concerns expressed both inside and outside of the Republican party that repealing (in whole or in part) the ACA without a replacement could have practical and political implications.
The details of the Patient Freedom Act are not yet immediately available, but the press briefing indicated states would be provided greater choice in implementing healthcare reform, generally through allowing states to choose among the following alternatives:
- Retain the ACA
- Create a new alternative
- Adopt the Patient Freedom Act’s plan (which generally involves greater use of health savings accounts and automatic enrollment into a health policy with opt-out rights).