Legal Brief: 3 Important Updates
Posted on October 13th, 2017
The Executive Order issued by President Trump on Thursday is one of three relevant updates this week from Washington.
The Executive Order issued by the president is not, by itself, new law. The Executive Order directs federal agencies to issue specific guidance on three topics within designated time frames. Guidance from the agencies will still have to proceed through the normal process. Specifically, the order:
- Directs the DOL to propose regulations or revised guidance within 60 days regarding association health plans, specifically the option for companies across state lines to join together for health coverage;
- Directs Treasury/DOL/HHS to propose regulations or revised guidance within 60 days on short-term, limited-duration insurance policies; and
- Directs Treasury/DOL/HHS to propose regulations or revised guidance within 120 days to expand the use of Health Reimbursement Arrangements (“HRAs”).
A copy of the Executive Order is available here. I encourage you to read the language of the order rather than only the media reports about it. It is a straightforward and short read.
For an excellent analysis, read Timothy Jost’s blog post at Health Affairs.
I am still processing the significance of the order and potential agency guidance. There will be more to analyze and say as the agency guidance develops in coming days.
Immediate Discontinuance of ACA Cost-Sharing Reduction Payments
Separate from the Executive Order, CMS issued a notice on Thursday confirming that the administration has ordered the agency to discontinue immediately payments to insurance carriers for reimbursement cost-sharing reductions (“CSRs”) included in ACA marketplace coverage. As a refresher, CSRs are supplemental to premium subsidies and are available to Marketplace enrollees that are under 250% of the Federal Poverty Level. CSRs help lower out of pocket costs in metallic plans by providing coverage for certain deductible, coinsurance, and copays.
The administration’s action is based on a legal opinion of the U.S. Attorney General, Jeff Sessions. This is a significant development, because the end of CSR payments will likely trigger premium increases on Marketplace coverage and could have a dramatic impact on premiums and enrollment through the Marketplace.
To confirm, this action does not mean that ACA Marketplace subsidies (advance premium tax credits) have been changed for 2018. Subsidies are still in place and not directly impacted by this development.
IRS Confirms Enforcement of Individual Mandate
I previously shared that the IRS issued multiple information letters in 2017 confirming its continued enforcement responsibility regarding the employer and individual mandates. There has been speculation that the IRS may back away from the individual mandate for 2017, but that speculation has ceased after the latest IRS release – a notice posted on its website regarding 2017 tax returns.
Thus, the individual mandate continues in full effect. To confirm, the tax penalty for 2017 is the greater of (a) $695 per adult and $347.50 per child, up to a cap of $2,085, or (b) 2.5% of adjusted gross income over the income filing threshold (capped by national average cost of Bronze plan).
We will have a webinar on October 31st at 2:00 pm, where we will discuss these items in greater detail. If you would like to join us, you can register online here.
By Jason M. Cogdill, Attorney at Law, The Cason Group Compliance Partner