On January 3, 2018, the Department of Labor issued proposed regulations that will make it easier for small employers to band together to form “association health plans” (“AHPs”), thereby providing access to more liberal underwriting and other rules governing large groups. This post provides context for, and summarizes the changes made by, these proposed regulations.
The recent Republican election victories appear to ensure that the Affordable Care Act’s (ACA) days are numbered. But with nearly a fifth of the U.S. economy, and the health care coverage for some tens of millions of U.S. citizens, at stake, the law will not simply be repealed. Something will be enacted to take its place. And some popular features of the law (e.g., protection for those with pre-existing conditions) are likely to survive.
Our previous posts have attempted to outline the alternatives and to handicap their odds. Last week we looked that the Trump/Pence transition plan, “Healthcare Reform to Make America Great Again.” This week we turn our attention to particulars of the program offered by House Speaker Paul Ryan entitled A Better Way. In the next two weeks, we will look at legislative proposals offered by Representative Tom Price (R-Georgia), who is President-elect Trump’s nominee to head the Department of Health and Human Services, and by Senator Orrin Hatch (R-Utah). In future posts, we will speculate on the process by which the various policy prescriptions might become law—including whether the repeal of the ACA will be done quickly (we expect it will), whether there will be a transition period (we expect that the answer is “yes”), and if so how long (anywhere from two to four years).
Unlike the Trump/Pence plan, which consists of a series of high-level bullet points, the Ryan plan is a fairly detailed policy proposal. Hence, while not in actual legislative form, it provides a good sense of some of the likely features of the ACA’s replacement.
The Affordable Care Act’s (ACA) employer shared responsibility rules provide applicable large employers (i.e., those with 50 or more full-time and full-time equivalent employees on business days during the preceding calendar year) with a choice: make an offer of group health plan coverage to substantially all of the employer’s full-time employees or pay a non-deductible excise tax if at least one full-time employee qualifies for a premium tax credit from a public insurance exchange or marketplace. (The particulars of the tax are explained in a set of Questions and Answers issued by the Internal Revenue Service.) Because the amount of the tax for failing to offer any coverage is substantial, most employers view the employer shared responsibility rules as imposing a mandate rather than offering a meaningful choice. Consequently, what constitutes an offer of coverage, and how the offer is reported, is of interest to employers.