What employers need to know — and do — about the troubled ACA
Sorting out the slew of executive and legislative actions that spell the law's demise.
A few pen strokes have put the Affordable Care Act in peril — leaving employers to watch as years of compliance changes may be undone.
Among its first acts, the 115th United States Congress signed a budget reconciliation bill that paved the road to ACA repeal, even though questions still linger about what legislators plan to do to replace it. Just last week, President Donald Trump signed an executive order giving various branches the power to dismantle key aspects of the law amidst a slew of mixed messages from top Republicans.
And with Tom Price, the nominee for secretary of health and human services, still at confirmation stage, no bill has firmly emerged as the symbol for what is to come.
"The reality is that there is still a lot of confusion and contention amongst Republicans about the best way to do this," Arthur Tacchino, Chief Innovation Officer at SyncStream, an ACA compliance software company, told HR Dive. Senator Susan Collins, R-Maine, called Trump's executive order "confusing," for one thing, thanks to the lack of legislative direction in Congress.
What is clear:
- Congress faces three competing needs: deciding on a bill, getting through the legislative process, and figuring out the timing of it all.
- The insurance markets feel threatened, putting pressure on Republicans to push through a strong replacement plan sooner than they expected.
- Key mandates, including the employer mandate, will likely go away soon — but are not gone yet.
A repeal of the ACA would obviously have an impact on HR compliance and benefits offerings, which is why we reached out to a slew of experts to answer one question: What the heck is going on?
The current state of policy and politics
With both a delayed repeal and a "simultaneous repeal and replace" plan discussed, timetables are murky at best.
"I was reminded the other day that ACA was signed into law in March 2010, 15 months after Obama was sworn in," Jim O’Connell, a compliance analyst at Ceridian, told HR Dive. "Republicans have put themselves in this box where they have to do something quickly ... when this is really a very difficult thing."
Timing is one-third of the "trilemma" that lawmakers face with the ACA, as well as the actual policy text and the legislative process that it will entail, O'Connell said. Right now, Republicans are at a party retreat in Philadelphia, where plans for the ACA are being discussed.
To add to the mire, the insurance carriers face uncertainty that threatens their business solvency. With the subsidies for lower-income Americans likely to change or be fully eliminated, carriers — who have already been exiting the markets — will continue to pull out of the public exchanges, O'Connell said. While a delayed repeal sounds ideal, it may not sit well with carriers who require a substantive replacement (or solid information on an upcoming replacement) immediately.
Notably, the reconciliation bill allows Republicans to pass a bill with a 51 vote majority — but only a repeal bill. That's the trouble.
"Anything that has to do with the regulation of insurance will require the 60 votes and would not be eligible for that treatment," O'Connell said. That means Democrats can potentially roadblock any plans put forth for replacement.
Obviously, that means massive negotiation will need to take place between now and when a bill is signed to ensure stability. O'Connell noted that Republicans may even be coming around to the idea of subsidies as some (at least temporary) reassurance to insurance carriers.
Some presidential power is at play here, too. Trump signed an executive order giving the Secretary of Health and Human Services, the Centers for Medicare and Medicaid, the Department of the Treasury, and the IRS the authority to rollback initiatives that formed the basis of the individual mandate.
But executive orders are strictly limited in how they can be used. The Atlantic notes that overzealous application of the order could lead to extremely shaky public markets. Even if the individual mandate was essentially dismantled, the ban on denying pre-existing conditions would still be in effect, leading to skyrocketing costs for sick people relying on the market.
At any rate, the status of the order is little more than symbolic until an HHS secretary is in place. Price's bill is considered a prime example of potential legislation, but whether he has a seat at the table with Trump's team concerning healthcare policy has been called into question as of late.
The fate of the employer mandate and essential health benefits
A few key aspects are likely on the chopping block in coming months. The excise or "Cadillac" tax will likely disappear, as its repeal has bipartisan support. The employer mandate will likely go, too.
"They can't do it in the budget reconciliation bill, but they can do it in legislation down the road," Hector De La Torre, executive director of Transamerica Center for Health Studies, told HR Dive.
"A lot of larger employers already offer coverage even without the employer mandate. It’s pretty much embedded in our society."
Chief Innovation Officer at SyncStream
The 10 essential health benefits rule will likely also be gone, including coverage of mental health services, maternity and newborn care and preventative services. Large group plans weren’t required to offer these packages, but many do already, as the rule was based on what large plans typically offered.
When asked if such changes would affect employer offerings, De La Torre said that most employers by now (four out of five in their recent employer survey) agree that healthcare benefits are key to attracting and retaining employees. One in five companies plan to change plan options (implementing a wellness program is a common change), but one-third currently don't plan to make changes to their plans next year.
What employers need to know and do now
The deadlines for various form submissions and reporting have not changed. In other words: The IRS is still expecting reporting documents.
The employers who will be most thoroughly affected by the changes are smaller employers who didn't offer healthcare pre-ACA, Tacchino noted.
"A lot of larger employers already offer coverage even without the employer mandate," he added. "It's pretty much embedded in our society."
Having a handle on who your employee population is will be key, De La Torre said. He listed a series of questions that employers need to keep in mind as new legislation is being considered:
Are you going to have a significant impact if Medicaid is rolled back and more lower-income workers need coverage?
Do you have a lot of employees whose spouses or dependents are getting insurance on the individual market? What happens if they lose coverage and want to join your plan?
If reductions in essential benefits are made, would you keep what you have or cut costs by shedding some of the newly mandated benefits?
Even if the mandate disappears, some reporting may still be required for the IRS, as the agency will need to know if employees are covered, O'Connell noted.
Legislation may change and some obligations may disappear. But right now, employers need to keep their eye on the ball. Stay steady and stay compliant with what is currently in place until a definitive replacement is on the books, all the experts said.
"Even if it may go away," O'Connell said, "it won't go away immediately."
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