Focus Turns Back to Regulatory Relief As ACA Remains Law

Now that House leaders have withdrawn the GOP’s American Health Care Act from further consideration, the Affordable Care Act (ACA) will stay in effect and attention is turning to federal agencies for any regulatory relief they can give employers under the existing law. In the meantime, employers must continue to comply with the ACA’s many coverage obligations and administrative requirements.

“Obamacare will remain the law of the land,” House Speaker Paul Ryan, R-Wis., said during a press conference shortly after the bill was pulled last Friday. “We’re going to be living with Obamacare for the foreseeable future.”

While the ACA and its implementing rules could still see modest changes through targeted legislative actions and regulatory adjustments, employers subject to the ACA—those with 50 or more full-time employees or equivalents, in particular—should continue complying with the ACA’s wide-ranging coverage mandates and employee tracking and reporting requirements, benefit attorneys advised.

Targeted Changes

“Congress is still likely to consider targeted legislative proposals to make modifications to the ACA,” said Chatrane Birbal, a senior advisor for government relations at the Society for Human Resource Management (SHRM).

“As Congress and the regulatory agencies take action on ACA modifications, SHRM will continue to advocate in support of the employer-sponsored system,” Birbal noted. “In particular, we will continue to support full repeal of the ACA excise tax on high-value employer-sponsored plans, which has bipartisan support in Congress, and we will advocate in support of easing the administrative burden of the ACA reporting requirements on employers, among other priorities.”

But while the agencies can use the rule-making process to mitigate some of the statute’s requirements, “the bottom line is that congressional action is required to outright repeal the employer mandate penalties” and related reporting requirements, Birbal said.

Most likely, “if the GOP addresses the ACA at all over the coming 20 months, it will address it in smaller bites, with bipartisan bills to repair aspects of the individual and small-group health insurance markets that have suffered in the wake of several ACA-imposed mandates,” predicted Ed Fensholt, senior vice president and director of compliance services at Lockton, a benefits brokerage and consultancy in Kansas City, Mo., and Scott Behrens, a benefits compliance attorney at Lockton, in an alert from the firm.

“One open question is whether and how the federal agencies in charge of implementing the ACA will take action at the administrative level to effectuate changes in the law,” said Garrett Fenton, an attorney with Miller & Chevalier in Washington, D.C., in an e-mail to SHRM Online.

Many of the details of ACA implementation were delegated to the agencies, particularly the departments of Health and Human Services (HHS), Labor and the Treasury, “meaning those same agencies still wield a great deal of ability to alter the trajectory of the law, and the insurance and health care markets as a whole,” Fenton noted.

Coverage Tweaks

As to what sorts of regulatory relief might be expected, “That’s the $64,000 question at this point,” Fenton said. “HHS has already published a proposed ‘market stabilization’ rule that would make a number of regulatory modifications, particularly for individual and small-group coverage,” such as tweaking the rules surrounding actuarial value requirements for some plans, he pointed out.

“One big-ticket item that could be on the regulatory agenda is revisiting the 10 essential health benefits that individual and small-group plans are required to cover,” such as maternity/newborn care, substance use disorder services and pediatric services, he noted. The definition of essential health benefits also affects large group plans, because all employer-provided plans—including those that are self-funded—are prohibited from subjecting the coverage of essential health benefits to annual and lifetime dollar limits.

“We may see HHS take regulatory steps to attempt to loosen those essential health benefits requirements, albeit within the parameters of the 10 categories of ‘essential’ benefits prescribed in the statute,” Fenton said.

The agencies also are likely to revise some of the rules pertaining to preventive care services that all plans and insurers are required to cover without cost-sharing, he noted, “particularly in connection with contraceptive coverage and other more controversial benefits.”

But “if the past few months have taught us anything, it is very difficult to predict how this will shake out,” Fenton said.

Anticipated Fixes Fall Off the Table

The now-withdrawn American Health Care Act (AHCA) would have provided relief for employer-provided health plans in a number of ways. For instance:

  • Employer mandate and tracking/reporting requirements. Under the ACA, employers with 50 or more full-time employees or equivalents are required to provide health insurance or pay a penalty. This AHCA would have reduced the penalty to zero for failure to provide minimum essential coverage. Without those penalties, follow-up regulatory changes could have reduced reporting and notification requirements, benefit attorney said. With the penalties still in place, using rule-making to lessen reporting obligations becomes much more difficult.
  • “Cadillac tax” and other levies on employer plans. The ACA imposed a 40 percent excise tax on the value of employer-sponsored health plans exceeding $10,200 for individuals and $27,500 for family coverage. The AHCA would have delayed the excise tax until 2026 and ended all other ACA taxes on employers. The excise tax is now slated to take effect in January 2020 and all other levies stay in place.
  • Limits on health savings accounts (HSAs). The ACA increased the tax on distributions for nonmedical expenses to 20 percent; the AHCA would have lowered the rate to 10 percent and allowed individuals to use HSA funds for over-the-counter medical items. The bill also would have nearly doubled the annual contribution limits for these accounts. Now, current contribution caps, taxes and spending restrictions will remain unchanged.
  • Limits on flexible spending accounts (FSAs). The ACA limited the amount an employee may contribute to a health FSAs to $2,500 indexed for inflation, with the 2017 limit set at $2,600. This AHCA would have repealed these annual limits and allowed FSAs to reimburse over-the-counter medications. Current limits and restrictions now will remain in place.

To see the full timeline of the ACA repeal process up to this point, visit our timeline here.