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Update: Health Care Choice Key Point of Executive Order (ICHRA)
Latest News: The promises made in EO 13813 were fulfilled on June 14, 2019, when President Trump announced the release of final rules for his administration’s HRA expansion.
Presidential Executive Order Promoting Healthcare Choice and Competition Across the United States (EO 13813) was signed by President Donald J. Trump on October 12, 2017. If the provisions within the order are fulfilled it will be a welcome change for small- to medium-sized businesses and their employees. The following is a summary of the bill focused on the potential benefits to employers.
Promises made, promises kept: Check out the updates (below) on the President’s actions to accomplish the goals of this EO in short-term health insurance and association health plans.
HRA expansion to reimburse stand-alone premiums
Section 4 of the order calls for, “Expanded Availability and Permitted Use of Health Reimbursement Arrangements” and is intended, “to increase the usability of HRAs, to expand employers’ ability to offer HRAs to their employees, and to allow HRAs to be used in conjunction with nongroup coverage.”
Currently, companies with 50 or more employees cannot use an HRA or any other vehicle to reimburse employees for health insurance premiums bought on the individual market. The company must sponsor a group health plan and then use the HRA to cover out-of-pocket expenses only.
In December 2016, employers with fewer than 50 full-time employee, those already exempt from the ACA employer mandate, were granted significant relief under Title XVIII of the 21st Century Cures Act. This relief comes in the form of a Qualified Small Employer (QSE) HRA. This provision – again, limited to small employers already exempt from the ACA mandate – allows employees to be reimbursed under the QSE-HRA for health insurance plans purchased on the open market.This section of the executive order appears to instruct the named cabinet secretaries (Health & Human Services, Treasure, and Labor) to expand the QSE-HRA to employers of all sizes. This will be a valuable option to companies with too many employees for QSE-HRA eligibility but not enough to get big discounts on group insurance plans.
FINAL UPDATE: On Friday, June 14, 2019, President Donald J. Trump announced the expansion of HRAs to include the individual coverage HRA, which opens up to all employers an HRA model similar to the QSE-HRA (as promised). Watch the president’s announcement here.
UPDATE: A jointly-issued proposed rule from the Department of Labor, Department of the Treasury, and the Department of Health and Human Services, on October 29, 2018, appears to be the first step in expanding employer flexibility in their use of HRAs. Proposed rules, in general, are nearly identical to that of the QSEHRA. For more information, please read, Proposed rules to expand HRA options for employers.
Image Credit: AP.
Association Health Plans for lower premiums
Section 2 of the Presidential Executive Order instructs the Secretary of Labor to look into ways of expanding the ways small groups and individuals can come together to form AHP’s. The order notes that larger employee groups usually get lower premiums based on their size alone. The President wants to bring this buying power to more disparate groups, allowing individuals and small companies to form AHP’s based on industry or geography that will then go to the health insurance market as a much larger sole entity.
One example would be 100 family-owned restaurants with an average of a dozen employees forming a 1,200-member AHP. Another would be 50 small businesses with an average 30 employees that are members of a local Chamber of Commerce coming together to form an AHP with 1,500 members. Group health insurance would be far more economical for these employers when they band together in an AHP.
This will mean tremendous savings and stability for smaller companies unable to qualify for lower group premiums reserved for much larger businesses, as well as the all-too-familiar concern that insurers are more likely to withdraw coverage on smaller groups.
UPDATE: June 19, 2018 — The Trump administration released its final rule governing association health plans, which allow small businesses and the self-employed to band together based on their industry or location and buy health insurance. Read all about it here.
Other provisions
Section 3 of the Presidential Executive Order addresses short-term, limited-duration health insurance. Today, STLDI is limited to 3 months’ coverage and is not renewable. The President wants to allow a longer duration and renewability to the plans.
UPDATE: August 2, 2018 — President Donald Trump’s administration issued a final rule Wednesday that clears the way for the sale of “short-term, limited-duration insurance” to help millions of people who do not want or need comprehensive health insurance providing the full range of benefits required by the ACA. Read all about it here.
To read the full text of the bill, click here.
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