President-Elect Trump Promised to Change the Affordable Care Act: How can employers prepare?

Wednesday January 4th, 2017

PrepareWhile changes to the ACA should be anticipated by employers, many experts agree that a full repeal is not imminent and it will take time for significant changes to occur.

What should employers do in the meantime? The ACA as it’s currently written is the law, and there are short-term requirements that must be met. Employers must also report 2016 coverage on employee W-2s and report the offer of health care coverage and actual coverage under the ACA’s employer mandate on Forms 1094/1095.

Potential ACA Replacement Components

Health care benefits remain a valuable recruitment and retention tool for employers, so they must figure out their future benefits strategy if the ACA is repealed under current Republican proposals.

While Trump and the GOP have said they plan to repeal and replace the ACA, they have not provided much detail on the provisions of their health care law.

Trump has said he’s in favor of consumer-directed health arrangements by expanding tax incentives for health savings accounts (thereby promoting high-deductible plans). He has also said he supports allowing individuals to deduct the cost of individual insurance policies.

Other possible components of an ACA-replacement plan include:

  • a cap on the employer deduction for health coverage provided to employees;
  • individuals without employer-provided health coverage who purchase coverage on the individual market would receive a tax credit;
  • increased contribution limits for health savings accounts;
  • improved price transparency from healthcare providers; and
  • insurance companies could sell policies across state lines.

In addition to being aware of potential ACA replacement components, a new report from the International Foundation of Employee Benefit Plans indicates what plan sponsors would do if the ACA is repealed:

  • 78% would keep in place some provisions already implemented in their health plans;
  • 38% would retain coverage for those with pre-existing conditions;
  • 31% would retain coverage of adult children to age 26;
  • 28% are already working on changes to avoid the Cadillac Tax, and 38% plan to do so before the tax takes effect; and
  • 3% would not offer healthcare benefits in five years.

How Employers Can Prepare

Although there is a great deal of uncertainty as to what will happen to the ACA in the coming months, there are things employers and plan sponsors can do now to ensure they’re prepared for changes to the law:

  • Comply with current ACA reporting deadlines (specifically Forms W-2 and 1094/1095-B and C).
  • Read the Empowering Patients First Act written by Health and Human Services Department Secretary nominee Tom Price, as this may be an indication of changes to come (in addition to the potential ACA-replacements mentioned above).
  • Stay up-to-date on potential changes through meetings with benefit plan consultants, brokers and legal counsel to discuss any changes to benefit strategies and plan design changes for 2018.