On October 12, 2017, President Trump issued Executive Order 13813: Promoting Healthcare Choice and Competition Across the United States (the “Order”) directing the Departments of the Treasury, Labor (DOL), and Health and Human Services (HHS) to consider proposing new healthcare rules or guidance intended to increase options and market competition with respect to health care.
Specifically, the order focuses on expanding the availability of (1) Association Health Plans (AHPs), (2) Short-Term Limited-Duration Insurance (STLDI), and Health Reimbursement Arrangements (HRAs).
AHPs: The DOL is directed to consider—within 60 days from the date of the Order—proposing new regulations or revise existing guidance that would allow more American employers to form AHPs. Specifically, the DOL could—in accordance with the Order—expand the conditions that satisfy the “commonality-of-interest” requirements under current DOL advisory opinions that address what constitutes an “employer” for purposes of ERISA § 5(3). The Order encourages the DOL to consider ways to promote AHP formation based on common geography or industry (versus current guidance requiring a genuine organizational relationship). The Order contemplates expanded access to AHPs would help small businesses to group together to collectively self-insure or purchase large group health insurance. This would, the Order reasons, help such small businesses avoid certain costs associated with certain small-group and individual plan requirements of the Patient Protection and Affordable Care Act (PPACA) such as essential health benefits and community rating.
STLDI: The departments are charged —also within 60 days from the date of the Order—to consider proposing regulations or guidance to allow expanded coverage periods of this low-cost (with typically higher out-of-pocket costs) coverage and for the consumer to renew such insurance. Currently, SLTDI is defined as health insurance coverage with an applicable coverage period of less than three months and has no permitted extensions beyond the three-month period. The Order directs these agencies to consider allowing “longer periods,” a term which is not defined.
HRAs: These departments are also instructed to consider—in this case within 120 days from the date of the Order—proposing new rules or guidance that would 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 individual coverage. Under current guidance (see IRS Notice 2013-54), HRAs for active employees are generally required to be integrated with PPACA-compliant group health coverage.
While the Order makes no actual change to any existing regulations, it does specifically request that the respective agencies make these considerations. How—and to what extent—the DOL, HHS, and/or the Department of the Treasury makes these considerations and (potential) subsequent changes for AHPs, STLDI, and HRAs remains to be seen.
We will continue to monitor these arrangements and any subsequent guidance as this develops.
The information contained in this article is not intended to be legal, accounting, or other professional advice. We assume no liability whatsoever in connection with its use, nor are these comments directed to specific situations.
CFCI, is the director of compliance services with WageWorks, Inc., in Irving, TX. He has over 15 years of experience in regulatory compliance and employer consultation. Folks attended New York University and holds a Certified in Flexible Compensation Instructor (CFCI) through the Flexible Compensation Institute, LLC, a wholly-owned subsidiary of the Employers Council on Flexible Compensation. Folks can be reached via email at: Jason.Folks@WageWorks.com.