photo by Gage Skidmore
In the wake of the election results, many Americans–particularly business owners–are anxious to see how a Trump presidency will impact the health insurance industry and particularly the Affordable Care Act (ACA).
While Trump made clear his desire to repeal the Act on “day one,” both he and his advisers have begun to reconsider whether an abrupt appeal would be advisable or even possible. Not to mention, outside of his displeasure with the ACA, Trump’s offered little other insight into his views on healthcare policy in general.
So, while the Trump administration is unlikely to do anything to immediately disrupt the insurance markets, the health industry, and the millions of Americans who’ve obtained coverage under the ACA, here are a few changes he has proposed that realistically could come to fruition in the foreseeable future.
- Elimination of both individual and employer mandates and their associated penalties, which would decrease participation in the health care exchanges and eliminate the need for employer and individual IRS reporting via Forms 1094 and 1095.
- Elimination of premium subsidies and cost-sharing reduction for policies purchased on the exchanges and the small-business tax credit.
- Elimination of the “Cadillac Tax” on high cost health plans, currently scheduled to go into effect in 2020.
- Removal of the prohibition on employer stand-alone health reimbursement arrangements and employer premium payment plans, allowing employers to fund HRAs that employees could use to purchase individual coverage or pay for health care expenses on a tax-free basis.
- Removal of the $2,500 cap on health care flexible spending accounts ($2,600 for 2017 after adjustment for inflation).
- Elimination of the expansion of Medicaid for individuals up to 138{d044ab8acbff62f209a116f8142e303cb886f535b0fcf58cb82cde7cb327d3c9} of the poverty level.
- Elimination of the Medicare tax on the wealthy.
There are a number of other tools at Trump’s disposal in his attempt to “revise and replace” the ACA. Lawsuits dealing with the ACA can be delayed, or he can chose not to appeal them. He can also choose not to enforce or to modify certain regulations affecting non-tax related provisions of the Act, such as those affecting transgender coverage.
Once the employer mandate is repealed, Trump can allow employers to offer minimum premium plans or mini-med policies. He can also affect how independent contractors vs. employees are classified by appointing a Labor Secretary with a more lax approach.
A proposed long-term overhaul to the Income Tax Code could include expansion of Health Savings Accounts (HSAs), resulting in increased contribution limits and broader eligibility. Another possibility is allowing individuals without employer-provided insurance to deduct health insurance premiums on their tax returns (whereas, currently, medical expenses must exceed 10{d044ab8acbff62f209a116f8142e303cb886f535b0fcf58cb82cde7cb327d3c9} of adjusted gross income to be deductible).
Trump also hopes to expand the sale of insurance across state lines in order to increase competition and implement state high-risk pools.
While it remains to be seen what, if any, of these changes do take place, one thing is certain. There WILL be changes to the ACA and other health-care reforms implemented by the Obama administration.
It’s important for employers to stay abreast of all important developments and understand how they affect their overall benefits package, as well as the overall health, well-being, and productivity of their workers.
Stay tuned for more information on these changes as they develop, and contact us if you have questions about how any changes affect you or your business!