Executive Order Directs Departments to Consider Expanding Association Health Plans,
Short-term Limited Duration Insurance Plans and Health Reimbursement Arrangements

October 12, 2017 

President Donald J. Trump today signed an Executive Order (Order) heralding the Administration’s latest attempt to undermine the Affordable Care Act (ACA). The Order neither repeals nor replaces the ACA, but it does direct the:

 U.S. Secretary of Labor to consider expanding Association Health Plans (AHP) – plans under which small employers in the same lines of business can cover their respective employees;

 U.S. Department of Health and Human Services (HHS), the U.S. Treasury Department, and the U.S. Department of Labor (DOL) (collectively, the Departments) to consider expanding short-term limited duration insurance to assist individuals between jobs, individuals in counties with only one insurer offering an ACA Marketplace plan and individuals who missed Marketplace open enrollment; and

 Departments to consider changing current Health Reimbursement Arrangement (HRA) rules to allow for greater flexibility in the types of expenses that HRAs can reimburse.

The Order’s directives will produce no immediate or broad health care changes unless and until the Departments act to implement regulations and issue specific guidance regarding the items outlined in the Order. That regulatory process will take months, at a minimum, to result in any actionable steps for employer health plan sponsors. Also, it’s important to note that it is highly likely that the changes contemplated by the Order will be not be implemented until at least 2019.

Association Health Plans (AHP)

The White House declared that the Order will give more Americans freedom to purchase health insurance across state lines by calling for DOL to consider an interpretation of existing law that would potentially allow nationwide employers related only by business type to join together through existing or new organizations expressly created to offer group health insurance to otherwise unrelated groups of employees. The Order also directs DOL to examine allowing AHPs based on common geography. AHPs would be available only to as yet undefined small employers and it is unclear what other restrictions might apply to employers seeking to create or join an association.

Short-term Limited Duration Insurance (STLDI)

STLDI policies exist in the individual market to allow certain individuals to get coverage for periods of time when they might not otherwise be able to get more traditional forms of health insurance. Last year the Obama administration declared that carriers could offer only nonrenewable STLDI policies with coverage periods no longer than three months. The Order calls for the Departments to consider expanding the maximum duration to 12 months and making these policies renewable. These are individual products that would have no direct impact on employer group health plan sponsors.

Health Reimbursement Arrangements (HRA)

HRAs are accounts funded by employers that under strict tax rules allow employees to pay for certain health care expenses, including deductibles and copayments, on a tax-favored basis. Existing rules limit the types of plans for which an HRA can reimburse individuals, but the Order seeks to ease those restrictions and allow HRAs to reimburse employees for the cost of individual insurance policies. The Order also calls for expanding employers’ ability to offer HRAs but provides no detail on what that means. Employers should note that the Order is not law – it merely directs the Departments to consider or examine ways to expand certain types of insurance and related items to potentially create more health care alternatives for Americans. Thus, employers should continue to comply with all ACA compliance and reporting obligations until further notice. EPIC will continue to monitor developments in response to the Order and update clients with any impactful Departmental regulations or guidance.

EPIC Employee Benefits Compliance Services For further information on this or any other topics, please contact your EPIC benefits consulting team.
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