The President’s recent executive order is aimed at increasing competition and lowering consumer costs in the health insurance markets. Specifically, the order directs three federal agencies to consider proposing new rules that would allow the sale of low-cost, short-term insurance, expand the use of health reimbursement accounts (HRAs), and lift some of the restrictions on associated health plans (AHPs).
It’s unclear how or when these proposed actions will change healthcare laws. The bottom line for employers and individuals is that no laws have been changed yet. The order itself has no force of law and issuing new regulations typically takes at least several months, plus what can be a lengthy and contentious period for public comment.
What’s in the executive order?
Though the order is recognized by many as another step to attempt to dismantle the Affordable Care Act (the ACA), the guidance under the order does not substantially change any key ACA provisions, but rather focuses on expanding access to certain types of insurance. Here is a summary of what the order instructs the Departments of Labor, Health and Human Services, and Treasury to consider:
Expand the “usability” of health reimbursement accounts (HRAs): Allow more workers to use tax-free employer contributions through HRAs to purchase their own plans on the individual market, and allow HRAs to be used to buy non-group coverage.
Expand the availability of short term, limited-duration insurance (STLDI): Allow individuals to buy short-term plans that last nearly a year (364 days), vs. the current rule that limits short-term policies to only three months. There are no other ACA regulations governing STLDIs. Insurance carriers can limit benefits under these plans significantly more than the ACA allows.
Expand access to health coverage by allowing more employers to form association health plans (AHPs): Allow small companies to come together (form associations) and purchase the type of coverage available to larger businesses. It is unclear whether the AHPs would be governed by federal employment law or state insurance regulations. There is a material open question as to whether insurance companies will be willing to cover this type of association formed primarily for the purpose of obtaining health insurance.
What the changes could mean to you
The biggest potential impact to employers is the proposed expansion of the association health plans, which proponents say would allow small businesses (and maybe even sole proprietors) in various areas of the country to join together for the purpose of purchasing health insurance. This would theoretically provide more flexibility to set premiums based upon the health of the overall group. Also, if associations are considered large-group plans, they would be exempt from the ACA rule for individual or small group plans that requires that they provide certain essential health benefits. The opponents point to the long-term viability of these associations, especially because the overall demographics that establish insurance costs would benefit the older member groups and potentially raise the rates of younger groups.
For individuals, if you work for a company and get your health insurance from your employer, the guidance in the order could make it easier for your company to give you pretax dollars to buy your own insurance. For people who don’t get their insurance at work, the impacts are less clear. However, greater access to short-term insurance plans may make it easier for individuals to purchase cheaper, less comprehensive coverage outside of the ACA marketplace. It’s also unclear whether individuals who choose to buy a short-term plan would be subject to the individual mandate (minimal coverage rule) under the ACA. The executive order does not address what is considered minimal coverage.
What’s comes next and when?
The hurry-up-and-wait rhythm of healthcare reform continues, though the tempo may be picking up a bit. We may soon see some of the new proposals coming from the agencies tasked with drafting guidance under the order. The Department of Labor was given just 60 days to issue their proposed rules for expanding the availability of association health plans. Though it’s unlikely that we will see any final changes completed by the end of the year, much less any new laws on the books that will impact this year’s healthcare open enrollment season. Most pundits agree that there will be very little impact felt in 2018 from this executive order.
As usual, employers should monitor developments closely and ensure they remain in compliance with the current regulations under the Affordable Care Act.
Denise Stefan, President of Engage Insurance, contributed to this article.