Update 10/18/2017 – On October 17, Senators Lamar Alexander and Patty Murray announced a tentative bipartisan deal to help stabilize the ACA Marketplaces and potentially fund Cost Sharing Reduction payments for two years. The bill must pass both the Senate and the House before it becomes effective, and would also require President Trump’s signature.
On Oct. 12, President Donald Trump ordered comprehensive changes to the nation’s health insurance system while also, in a separate move, ended health care subsidies to insurers for low-income Americans. The White House billed the decisions as relief to those suffering under the Affordable Care Act (ACA), while the opposition condemned these changes as actions aimed at undercutting the ACA.
Expansion of association health plans and short-term insurance
The executive order signed by Trump directs federal agencies to make it easier to set up “association health plans,” which are groups of small businesses that pool together to buy insurance. The order also seeks to broaden the definition of short-term insurance from three months to almost a year in duration.
By expanding both these types of plans, the administration expects insurance to be less costly than the plans sold on the state-based insurance exchanges, which provide more extensive coverage options. One concern, however, is healthy customers will jump out of the individual markets for cheaper plans, leaving sicker customers on the underwritten exchanges.
Health care subsidies to end
Trump also will end health care subsidy payments to insurance companies that used them to pay out-of-pocket costs for low-income people receiving coverage through the exchanges. The future of these payments have been in doubt for months – dating back to the Obama administration – because of a lawsuit filed by House Republicans. The lawsuit alleged the Obama administration was paying these subsidies illegally because Congress had never authorized the cost-sharing arrangement.
Until now, the Trump administration had continued the payments on a monthly basis. A group of state attorneys general has indicated it will sue to block the administration from ending these payments, which it claims will cause the individual markets to unravel.
What this means for employers
Neither of these changes is aimed primarily at employers subject to the ACA employer mandate, so clients using Paycom’s ACA services likely won’t see a direct impact to their obligations under the law. However, the tweaks indirectly could result in higher costs to employer-sponsored plans.
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