Executive Summary: On Friday January 20, 2017, President Trump signed an executive order titled “Minimizing the Economic Burden of the Patient Protection and Affordable Care Act Pending Repeal.” The Order directs the Secretary of Health and Human Services (HHS) and the heads of all other executive departments and agencies (e.g., Treasury, DOL, Health and Human Services, etc.) to take all actions consistent with law to waive, defer, or delay the implementation of any provision or requirement of the Affordable Care Act (ACA) that would impose a financial (fee, tax, penalty) or regulatory burden on states, individuals, families, healthcare providers, and/or health insurers. The order also encouraged the development of a free and open market in interstate commerce for the offering of healthcare services and health insurance.
The Executive Order does not identify which part/parts of the ACA the new administration intends to eliminate or repeal. However, it indicates that the administration may: (1) make changes to the individual mandate; (2) make changes to the fees imposed under ACA; (3) allow selling of insurance across state lines; and (4) give control to the states to determine Medicaid and CHIP coverage.
In addition, on January 13, 2017, the U.S. House of Representatives passed a budget resolution for fiscal year 2017, which was previously approved by the Senate. The budget resolution basically begins the process of repealing the ACA through the process of budget reconciliation, which allows for expedited consideration of tax, spending, and debt limit legislation.
Employers’ Bottom Line
The President’s Executive Order does not expressly repeal or delay the Employer Mandate under Section 4980H of the Internal Revenue Code (Code) or the ACA reporting requirements under Code Sections 6055 and 6056. Instead, the Order directs the agencies to scale back on the enforcement of the ACA wherever they can, while the new administration and Congress work on repealing the ACA.
The agencies are unlikely to scale back enforcement anytime soon, since the heads of the agencies that oversee the ACA have not been officially appointed. Moreover, the rules and regulations related to the ACA can only be replaced or deleted through the administrative rulemaking process. Thus, carrying out the directives in the Executive Order will require revision of rules through the notice-and-comment rulemaking process.
Furthermore, reconciliation is not a “magic wand,” and full repeal of the ACA cannot be accomplished through the budget reconciliation process. Instead, a budget reconciliation bill can only address the ACA provisions that relate to budgetary issues (including, for example, the Employer Mandate). Both the House and Senate have a target date of January 27, 2017, to draft repeal legislation. However, until such legislation is drafted and passed, the Employer Mandate is still law, and employers should continue to comply.
Accordingly, until the Employer Mandate and the ACA reporting requirements are expressly repealed, employers should continue complying with them.
If you have any questions regarding this Alert, please feel free to contact the authors, Tiffany Downs, tdowns@fordharrison.com or Brian Spring, bspring@fordharrison.com, both of whom are members of FordHarrison’s Employee Benefits practice group. You may also contact the FordHarrison attorney with whom you usually work.