What stays and what goes in upcoming health reform
Although an executive order from President Donald Trump and a leaked document outlining potential Republican plans for Affordable Care Act legislation have come out recently and given some indication of the direction the GOP would like to take healthcare reform, there is still no concrete plan in place. At EBA’s Workplace Benefits Renaissance last week a panel of experts debated the fate of some of the ACA’s key provisions, including the tax-favored status of employee benefit plans, individual mandate, employer mandate, COBRA and essential health benefits.
In the session titled, “Obamacare — You’re fired!” moderator John Hickman, partner at law firm Alston & Bird LLP, noted President Trump has repeatedly mentioned concepts such as increased flexibility with Medicaid, reducing malpractice lawsuits and lowering prescription drug costs. However, Hickman said, “What’s interesting is what’s not there.”
President Trump has yet to directly address an issue of chief concern to advisers and employers: the tax-favored status of employee benefit plans and employee contributions. “It’s something we’re going to see heavily debated,” Hickman said.
Panelist David C. Smith, a North Carolina adviser, told attendees at the New Orleans conference he thinks Congress could try to use revenue from removing the employee tax exclusion to fund broader tax reform. However, he sees three problems with that approach: First, large employers don’t want to get rid of the current system; second, carriers don’t want to change either because they don’t want to sell everyone “inefficient” individual policies; and third, “You’ll have a major problem telling small businesses they can only deduct up to 90% instead 100% of coverage [they can deduct] now,” he said.
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If Congress does touch the tax status of employer-sponsored benefits “it’s suicide” on the market, added panelist Rina Tikia, president of Tikia Consulting Group, Inc. in Metairie, La.
As for the individual mandate provision of the ACA, panelist Nikki Chriesman-Green, regional ERISA counsel at USI Southwest in the Dallas-Fort Worth area, agreed with Tikia that it will go away under Trumpcare. Tikia suggested that new associations are likely to pop up across the country for people to join and gain insurance in the process.
Smith was the only dissenting voice on the subject, saying carriers “have said very strongly they want to preserve it.”
‘We just need something that works’
The employer mandate, on the other hand, “was stupid to begin with,” Smith said, as 99% of companies with more than 50 employees already offered insurance before the ACA.
When Tikia suggested that employers would likely go back to the 40-hour definition for a full-time worker, Smith pointed out that many states already have legislation that defines 30+ hours a week as full-time work, so such a move would only affect the self-funded marketplace, regardless.
However, one issue that remains unclear, Tikia said, is what would happen to COBRA if a contingent of the workforce in the 30-35 hour category did lose coverage. Since a change in coverage does not trigger COBRA eligibility currently, what happens to those employees would need to be determined, she said.
Enacting the ACA’s essential health benefits provision led to many complaints about expensive coverage, said Hickman. Repealing the provision, he believes, will bring on a resurgence of mini meds. Many limited medical plans became out of compliance with the ACA’s essential health benefit requirements. “They’re going to make coverage more flexible,” said Hickman.
Although President Trump has promised lower deductibles and less expensive coverage, “that can’t happen,” said Smith. “I don’t hear a lot of people [planning on] getting rid of preventative care.”
Elements Trumpcare will get rid of, all of the panelists agreed, include 1557 nondiscrimination regulations and limits on FSAs.
Smith also expects to see HSA restrictions loosened. However, he added, “I’d rather see some stability. We just need something that works and we stick with it.”