Yesterday, President Trump signed an executive order (the “Order”) that may ultimately impact the manner in which some employers provide health coverage to their employees. The Order directs federal regulatory agencies to take action in the following three areas:
- Consider proposing regulations or revising existing guidance to allow more employers to form association health plans (AHPs), which would allow small employers in particular to obtain coverage other than through the small group insurance market. As part of this directive, the Secretary of Labor is to consider expanding the conditions under which multiple employers can satisfy the commonality-of-interest requirement that must be satisfied so that an AHP can qualify as a single ERISA plan providing benefits to the employees of more than one employer.
- Comment: This issue is the most complicated of the issues addressed by the Order because it implicates State, as well as federal, law. Under ERISA, AHPs are subject to State regulation because they are multiple employer welfare arrangements (MEWAs). It is unclear at this point how any regulatory action by the Department of Labor would impact the ability of States to continue to regulate these types of plans
- Consider proposing regulations or revising existing guidance to expand the availability of short-term limited-duration insurance (STLDI) to allow longer periods of coverage under such policies.
- Comment: Currently there is a very narrow exemption for STLDI under the ACA. Regulatory action could potentially expand that exemption. However, federal regulatory action would not impact State law, which also regulates STLDI. In general, any changes made with respect to STLDI will have little impact on employer-sponsored group health plans.
- Consider proposing regulations or revising existing guidance to increase the ability of employers to use health reimbursement arrangements (HRAs), including the ability to use HRAs in conjunction with non-group health coverage.
- Comment: Prior to the ACA, employers were able, under federal law, to provide stand-alone HRAs through which employers could provide funds that employees could use to purchase their own health coverage (e.g., by purchasing a health insurance policy in the individual insurance market). Regulatory guidance implementing the ACA essentially eliminated the ability to sponsor such an arrangement. Reversal of that guidance could provide employers with an additional option for providing health coverage to their employees, provided that applicable State insurance law allows employers to assist their employees purchase insurance in the individual insurance market (which is not the case in all States). Note, any changes in this area would primarily impact large employers because small employers are currently able to offer such an arrangement through qualified small employer HRAs.
The Order itself does not change existing law. The Order is simply the first step in what could be a lengthy process to review these issues and make changes to existing regulatory guidance. Furthermore, although the Order states certain policies the President would like the regulatory agencies to advance in the course of addressing these issues, the ultimate scope and impact of any regulatory action in these areas is difficult to predict. Any such regulatory action must be consistent with existing law and, in most cases, is subject to public review and comment.
We will continue to monitor any developments in these areas and provide updates as needed.
Please contact us for any questions regarding the Order.