What does a new president mean for employee benefits?

With the inauguration of President-Elect Donald Trump imminent, it is still not certain what his administration will ultimately mean for health care.

“Many promises regarding health care reform were made on the road to the White House, and now the question is: How or will those promises be delivered upon?” says Frances Horn, employee benefits compliance officer at JRG Advisors. “More importantly, many employers want to know how Trump’s presidency will affect them. But until a detailed proposal is released, speculation remains and the only certainty is that change is coming to health care.”

Smart Business spoke with Horn about the state of employee benefits under a new administration.

What can employers expect to see?

Trump campaigned on revamping the health care system as a top priority for his administration. With the Republicans retaining control of the House and Senate, the stage appears set for significant changes, possibly even a ‘repeal and replace’ of health care reform. At the same time, there have been comments on the possibility of retaining some elements of the Affordable Care Act (ACA).

In order to repeal the ACA, Senate rules require 60 votes, which the Republicans do not maintain. However, a Republican Congress and president can utilize the budget reconciliation process to repeal significant portions of the law. Budget reconciliation may only include provisions that affect the revenues or expenditures of the federal government. Thus, the individual mandate, premium tax credit, Medicaid expansion and other imposed taxes of the ACA could be addressed. However, popular insurance reforms such as the ban on pre-existing condition exclusions, coverage for dependent children to age 26, prohibition on annual and lifetime limits for essential health benefits and community rating are unlikely to be affected by the budget reconciliation process.

Besides legislation, what other avenues could reverse the ACA or other policies?

It is common that when the White House changes party, the incoming administration seeks to impose a moratorium on regulations that haven’t yet gone into effect. As the president-elect appoints new leaders in the Department of Labor, Treasury Department, and Department of Health and Human Services, he may consider exercising his authority to change regulations or withdraw previous guidance. Since legislation can be time consuming and regulations often require a notice and comment process, regulatory authorities may take a position of non-enforcement against current ACA provisions.

Trump could issue Executive Orders early in his presidential agenda and will likely rescind many of President Barack Obama’s Executive Orders. This may include any that have a connection to benefits, such as the overtime rule or paid time off for federal contractors. This could then lead to new agency regulatory rule-making to revise or completely repeal the rules.

Numerous issues in the benefits arena — the fiduciary rule affecting retirement plans, which does not go into effect until April 2017, many ACA rules (though most are now final) and paid sick leave rule for federal contractors — could be affected. Due to timing, though, many plan sponsors have already made plan design and operational changes and it may be more trouble than it is worth to reverse those decisions.

What areas addressed in Trump’s campaign bear watching?

Key areas to watch, include promises to:

  • Allow individuals to fully deduct their health insurance premiums.
  • Permit insurance to be sold across state lines.
  • Expand Medicaid grants to the states enabling them to cover more of the local population.
  • Direct the Food and Drug Administration to immediately enact safety standards to enable prescription drug importation.
  • Propose significantly higher contribution limits and federal ‘seed’ contributions via tax credits for Health Savings Accounts.

Until a specific proposal is released, employers may want to stay the course. Any new developments during this transition of executive power will be monitored and reported upon.

Insights Employee Benefits is brought to you by JRG Advisors