Trump Tries to Change the ACA but Not the Employer Mandate
2 minute read:
President Trump has made some administrative changes to the Affordable Care Act. None of these changes, however, affect the law’s Employer Mandate. These changes include State Relief and Empowerment Waivers guidance and expansion of Health Reimbursement Arrangements (HRAs). The Centers for Medicare & Medicaid Services (CMS) and the U.S. Department of Treasury issued guidance on state waivers in November 2018. The new State Relief and Empowerment Waivers provide states flexibility to address problems with individual insurance markets, increase coverage options for individuals, and encourage states to adopt innovative strategies to reduce future overall health care spending. Under the guidance, states have been given much more freedom and flexibility in the types of relief and empowerment waivers they can provide. The guidance provides five principles that establish waivers. They can be found below:
- Provide increased access to affordable private market coverage.
- Encourage sustainable spending growth.
- Support and empower Americans with access to affordable, high value health insurance.
- Foster state innovation.
- Support consumer-driven healthcare
CMS has released a fact sheet on the State Relief and Empowerment Waiver Guidance which highlights the changes along with the desired outcome for the new initiative. It can be viewed here.
The Trump administration also has proposed expanding Health Reimbursement Arrangements (HRAs). Last fall, the Department of Health and Human Services (HHS), the Department of Labor (DOL) and the Department of Treasury released a proposed regulation that would allow employers to use HRAs to reimburse employees for the cost of individual health insurance coverage, currently prohibited by the ACA. It’s argued that the expansion of HRA use would make the individual marketplace more competitive by giving employees an opportunity to purchase healthcare on their own, with the aid of funding from their employers in exchange for electing to opt out of company-sponsored health coverage. The blog Fierce Heathcare reported: “Officials estimate 10 million people would purchase insurance through HRAs, including 1 million people that were not previously insured. Most of those people would be concentrated in small and mid-sized businesses.”
Both of these proposed initiatives continue to move through the regulatory process.
An element of the ACA that has continued to avoid the political spotlight is the ACA’s Employer Mandate.
Under the Employer Mandate, Applicable Large Employers (ALEs), organizations with 50 or more full-time employees and full-time equivalent employees, are required to offer Minimum Essential Coverage (MEC) to at least 95% of their full-time workforce (and their dependents) whereby such coverage meets Minimum Value (MV) and is affordable for the employee or be subject to IRS 4980H penalties presented in IRS Letter 226J.
Employers also may receive ACA penalties for failing to file forms 1094-C and 1095-C with the IRS or furnish 1095-C forms to employees under IRC 6721/6722. These IRS penalty notices – Letter 5005-A/Form 886-A – address the failure of employers to distribute 1095-C forms to employees and to file 1094-C and 1095-C forms with the federal tax agency by required deadlines. The IRS is sending the proposed penalty assessments using Letter 5005-A and Form 886-A. These are penalties in addition to penalties for not offering the required healthcare coverage under IRC 4980H.
Organizations should elect to have a cost-free ACA Penalty Risk Assessment performed to learn about their potential exposure and strengthen their ACA compliance.
To learn more about ACA compliance for the 2019 tax year, click here.
For ACA reporting deadlines in 2020 for the 2019 tax year, organizations should review this link for important dates and requirements.
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