Health Care Executive Actions: The Basics
Yesterday, President Trump signed an Executive Order (EO) instructing a number of departments to consider easing certain health insurance rules related to small businesses, short-term health insurance policies and Health Reimbursement Accounts (HRAs). The stated goal is to provide Americans more affordable choices and allow greater control over their health care decisions. Additionally, the White House announced it will stop making Cost-Sharing Reduction (CSR) payments and, last week, released Interim Final Rules on contraceptive coverage effectively making it possible for any employer to opt out of covering contraception, or contraceptive services.
While the EO signed yesterday provides guidance to the various agencies overseeing the regulation and implementation of the ACA, it does not make any immediate changes. Updated rules and guidance provided by the agencies in response to the EO will be necessary before changes can be implemented. Conventional wisdom is that most of these changes wouldn’t take place until 2019.
Association Health Plans
Under the EO, the Administration is directing the Department of Labor to consider proposing regulations or revising guidance to expand access to Association Health Plans (AHPs) that will allow small businesses to purchase insurance collectively across state lines.
Changes to current AHP regulation will create insurance cost savings for some, however, the general consensus among experts is that for every winner there would be a loser in the form of increased premiums for those individuals remaining in traditional group and individual market plans.
Short-term Health Plans
HHS, Treasury, and Labor Departments (“tri-agencies”) are being asked to consider updating rules on short-term, limited duration insurance to allow plans to last as long as 12 months and be renewable. These policies are not required to follow several of the ACA mandates, including covering Essential Health Benefits (EHBs), prohibiting annual limits, offering coverage for pre-existing conditions or ensuring Medical Loss Ratios (MLRs) are met. Currently, these policies can only be sold for periods of three months or less and cannot be renewed after a total of three months. Extending their terms and making them renewable would, in effect, allow people to buy plans that would appeal to the healthy, but increase premium prices on those who need more robust benefits to cover expensive illness.
Health Reimbursement Accounts (HRAs)
The tri-agencies are also directed to consider ways to expand the flexibility of HRAs. The Administration specifically focused on three HRA rules it wants the agencies to consider modifying: making employer HRA contributions tax deductible, allowing HRA funds to be used for premium reimbursement, and allowing HRAs to be used in conjunction with non-group coverage. Some of these changes could create the opportunity for small employers to push people into the individual/direct insurance market where policies will continue to increase in price as the healthy risks leave the pool.
Cost-Sharing Reduction (CSR) payments discontinued
The ACA requires insurers to reduce cost-sharing for eligible, low-income individuals enrolled in silver plans through their local Marketplaces. This financial assistance is in addition to the Advance Premium Tax Credit. The Administration said because Congress has not appropriated funds for the CSRs, “the government cannot lawfully make the [CSR] payment.” This decision primarily affects insurers who will no longer be reimbursed for the CSRs but are required by law to offer them to eligible customers. As a result, customers who have reduced cost-sharing through the Marketplace should not see an immediate impact. Of course, insurers losses will need to be recouped in future years, among all market segments.
Expanded Exemption for Covering Contraceptive Services
Interim final rules (IFRs) issued Oct. 6, 2017 expanded the current exemption for employers to not cover contraceptive services under their sponsored group health plans. Effective immediately, employers may exclude coverage for contraceptive services based on moral or religious objections. This is in addition to the exemptions already outlined under the ACA for “closely-held” for-profit corporations, religious non-profit organizations and religious employers (e.g., churches).
In addition, employers with religious or moral objections are no longer required to submit a self-certification of their objections to their insurance carrier or file a notice with the HHS – a process that enabled cost-sharing responsibility to be passed to the plan’s issuer or third-party administrator (TPA). Because this accommodation is now optional, it is possible that costs for contraceptive services may not be covered, passing the full financial responsibility of contraceptive services to the customer. Employers who choose to exercise the accommodation process will pass responsibility for covering contraceptive services to the carrier or TPA, alleviating the financial responsibility from their employees and their dependents.
Ongoing compliance with the ACA is required unless and until official guidance to the contrary is issued. The CSR payment discontinuation and IFRs on contraceptive coverage are effective immediately. It is important to note, however, that the EO does not immediately affect any current ACA rules and regulations, but directs the tri-agencies to begin modifying or creating new rules.
Please contact us if you’d like to have a more in-depth discussion on how these changes may impact your health plan.