Over the past week, the executive branch has issued a series of regulations and executive orders aimed at loosening certain health insurance rules and regulations that impact employers, employees, insurance companies, and individuals. The new regulations, which were issued in response to a previous executive order, allow an expanded group of employers to apply for a waiver from the Affordable Care Act (“ACA”) mandate to provide contraceptive coverage. The regulations were followed by an executive order instructing various departments to work to facilitate the purchase of health insurance across state lines and to expand the availability of certain healthcare insurance products. A second order by the Trump administration announced that, after months of speculation, the executive branch will stop making cost-sharing reduction payments to insurers. To provide you with a recap of this busy week, below is a brief overview and “key takeaway” of each of these actions.
The new regulations, which became effective as of October 6th, expand the types of employers eligible for an exemption from the ACA mandate to provide certain contraceptive coverage to participants at no cost. Certain religious employers were already exempt from the requirement, and certain nonprofit and closely-held employers with religious objections have been allowed to engage in an accommodation process to effectively shift their coverage obligation to insurers or third-party administrators. Under the new regulations, the exemption for sincerely held religious beliefs is available to virtually all non-governmental employers, including churches, non-profit entities, and for-profit entities, and does not require an accommodation process to shift the coverage responsibility (although the accommodation process remains an option). The new regulations also expand the exemption to certain entities that object to contraceptive coverage based on sincerely held moral convictions, even if the objection is not based on religious beliefs. The key takeaway from these new regulations is that a wider range of employers with objections to contraceptive coverage may be eligible for the exemption, but any employer considering such a reduction should consult with their benefits advisors to make sure that they follow the proper procedures.
In an executive order issued on October 12th, the President announced the executive branch’s position that it will facilitate (i) the purchase of health insurance across state lines, and (ii) the development and operation of a healthcare system that provides high-quality care at affordable prices. To accomplish the first goal, the order instructs the Secretary of Labor to consider regulations or guidance that will allow more employers to form association health plans (“AHPs”), allowing for larger risk pools and potentially lower premiums. To accomplish the second goal, the order instructs the Departments of Labor, Health and Human Services, and Treasury to consider regulations or guidance that will expand the availability of short-term, limited-duration insurance (“STLDI”) and health reimbursement arrangements (“HRAs”). Specifically, the departments are instructed to consider an extension of the coverage period for STLDI, and to allow the use of HRAs in conjunction with nongroup health coverage. The key takeaway from this order is that, while it indicates a desire by the administration to implement large-scale change in the healthcare industry, the details of any such changes (and the new products that may be offered) will remain unclear until regulations or guidance are issued by the respective agencies.
The administration followed up with a second healthcare action on the 12th, announcing that the administration would stop making payments to insurers that sell individual health policies on the ACA exchange, known as cost-sharing reduction (“CSR”) payments. The termination of CSR payments will result in a large decrease in the funds provided to these insurance companies, but will not decrease the premium tax credits paid to eligible individuals that purchase coverage through the exchange. The termination of CSR payments is expected to result in a sharp increase in the cost of certain individual health plans offered through the exchange, with previous estimates by the Congressional Budget Office projecting a 20% increase in premiums as a result of the termination. In anticipation that CSR payments would be terminated, many insurers preemptively proposed increases to 2018 premium rates to reflect the cost of such termination.
For more information about anything discussed in this Client Alert, please contact a member of the Maynard Cooper & Gale Employee Benefits & Executive Compensation practice group.