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The Affordable Care Act: What Does President Trump’s Executive Order Mean for Employers?

by Anita Byer2/6/2017
ACA-insurance-affordable-care-act-repeal

It wasn’t long before campaign promises to repeal Obamacare became official White House policy. On his first day in office, President Trump issued an Executive Order stating that “it is the policy of my Administration to seek the prompt repeal of the Patient Protection and Affordable Care Act.” This clearly marks the beginning of a long period of uncertainty about the future of Obamacare. What isn’t so clear is how the President’s Executive Order will affect employers.

Let’s start by clarifying that the Executive Order did not amend or repeal the Affordable Care Act (ACA). Only an act of Congress can do that. Instead, President Trump essentially issued marching orders to the heads of executive agencies about how their ACA-related authorities and responsibilities must be exercised under his administration. As head of the Executive Branch, this is within the President’s authority.

Specifically, the President directed these executive agencies to exercise all authority and discretion available to them to waive, defer, grant exemptions from, or delay the implementation of any ACA provision or requirement that would impose costs, fees, taxes, penalties or regulatory burdens. Can a directive as simple as this really change the ACA?

No, it can’t change the law itself. What it can do is change how the ACA is interpreted and enforced. This is because Congress sometimes uses broad strokes to enact a law. It then empowers one or more federal agencies to fill in the details. When it comes to the ACA, Congress did this quite a bit.

For example, Congress gave various federal agencies, including the Department of Health and Human Services (HHS) and the Internal Revenue Service (IRS), the general authority to promulgate any rules and regulations that may be necessary or appropriate to carry out a number of ACA provisions. Congress also gave these agencies some very specific and significant authority.

  • Hardship Exemptions. Congress included a hardship exemption in the ACA so deserving individuals can avoid the penalty for failing to have health insurance. Congress authorized HHS to define and determine whether someone qualifies for a hardship exemption.
  • Large Employer Reporting Requirements. Congress required applicable large employers to furnish and file information reports detailing offers of health insurance coverage to full-time employees. Congress authorized the IRS to determine how these reports must be prepared and when they are due.
  • Reasonable Cause Waivers. Congress included a waiver provision in the ACA so employers showing reasonable cause could avoid the penalty for failing to comply with the ACA’s reporting requirements. Congress authorized the IRS to define and determine whether an employer qualifies for a reasonable cause waiver.
  • Large Employer Penalty. Congress created a penalty for applicable large employers failing to offer full-time employees a minimum level of health insurance coverage, which must be paid when the employer receives a notice and demand for payment. Congress made the IRS responsible for not only determining when payments would be due, but for sending the actual demand for payment.

As you can see, various executive agencies have quite a bit of power to affect how the ACA is interpreted, applied and enforced. This power was given to them by Congress when the ACA was enacted. The Executive Order merely directs how these agencies must exercise the authorities and powers they already had under the ACA.

However, there are limits to this power. Formal rule and regulatory changes should be subject to the Administrative Procedure Act’s notice and publication requirements. This process can take months, possibly years. There may be a bit more flexibility when it comes to less-than-formal agency actions, but there are still statutory and constitutional limits that cannot be exceeded.

How far will President Trump and the executive agencies take the Executive Order to push their agenda? How far will opponents let them go before pushing back? How will the courts rule if (when) lawsuits are filed? The only thing we know for sure is that change is coming.

Setnor Byer Insurance & Risk is committed to guiding you through the constantly developing health care landscape. Check back with us periodically for future informational updates about the Affordable Care Act or contact us if you would like to discuss how we can help you comply with health care reform.

To receive regular updates about developments which may affect your business, subscribe to Setnor Byer Insurance & Risk's weekly risk management news brief.

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