President Trump’s Executive Order: The Impact to Employers and Employees

As stated in the prior blog posting, the Executive Order serves as a policy statement and the applicable agencies are not likely to take immediate action on this directive. However, once the Department heads for Health and Human Services, the Treasury, and Labor are confirmed and in place, we may see guidance as to how they intend to enforce (or not enforce) certain provisions of the Affordable Care Act (ACA).

So, What Should Employers Do?

For now, employers should continue to follow the requirements of the ACA until (and unless) further guidance from the applicable administrative agency is issued. Listed below are some of the ACA items still required by applicable employers as of January 2017:

  • Employers with 50 or more full-time equivalent: Continue to prepare and provide 2016 Forms 1094-C and 1095-C. For 2016, the Form 1095-C is due to ACA full-time employees, and for self-insured plans all covered individuals, by March 2, 2017.  form 1094-C and all forms 1095-C are due to the IRS by March 31, 2017 (unless filing paper, then the forms are due to the IRS by February 28, 2017).
  • Employers with 50 or more full-time equivalent: Prepare for the enforcement of the employer mandate penalties, if applicable.
  • Employers with 250 or more W-2 in the prior year, are required to report the value of health insurance coverage on the Form W-2 (box 12, code DD).
  • Continue to comply with the following mandates as to group health plans:
    • No lifetime or annual dollar limits on Essential Health Benefits
    • Cover children to age 26
    • No retroactive cancellation of health plan coverage, except due to fraud or intentional misrepresentation of material fact
    • No pre-existing condition exclusion clauses
    • No waiting periods in excess of 90 days
  • If applicable, comply with additional mandates for non-grandfathered plans.
  • Employers must continue to provide ACA-related notices, including but not limited to Summary of Benefits and Coverage (SBC), Notice of Coverage Options, etc.
  • For those employers who offer a health flexible spending account (FSA), the maximum employee contributions for 2017 cannot exceed $2,600.  In addition, over-the-counter drugs are excluded, unless prescribed by a physician.

What is the Impact to Employees?

Individuals should still continue to act as though the individual mandate will be enforced (have minimum essential coverage, qualify or an exemption, or pay a penalty). For the immediate future, it appears subsidies remain available to assist certain low and middle income individuals to purchase coverage in the Marketplace, if coverage is not available elsewhere (e.g., employer-sponsored, Medicare, or Medicaid).

There is a significant question as to whether the Trump administration will continue to enforce the individual mandate. It is a crucial component of the ACA in that it operates to keep the risk pool large enough to reduce adverse selection. However, by not enforcing the coverage requirement, it could lead to an exodus of healthy individuals from Covered California and creating an unstable risk pool.

There is also question around the continued availability of subsidies during this transition period. As of right now, they remain available. However, this will be an area to be closely monitored as the leadership at HHS takes shape.

We will continue to monitor and report developments. If you have any questions, please contact MNJ Insurance Solutions at (714) 716-4303.

This content is provided for informational purposes only. While we have attempted to provide current, accurate and clearly expressed information, this information is provided “as is” and MNJ Insurance Solutions makes no representations or warranties regarding its accuracy and completeness. The information provided should not be construed as legal or tax advice or as a recommendation of any kind. External users should seek professional advice form their own attorneys and tax and benefit plan advisers with respect to their individual circumstances and needs.