On his first day in office, Trump signed one of his first executive orders, entitled “Minimizing the Economic Burden of the Patient Protection and Affordable Care Act Pending Repeal.”
The Executive Order states that it is Trump’s policy “to seek the prompt repeal” of the ACA, and that in the meantime, the executive branch is ordered to minimize the “unwarranted economic and regulatory burdens of the “ACA” will be given the maximum extent permitted by law, and to “prepare the States more flexibility and control to create a more free and open health market.”
This includes the directive to responsible agencies to “exercise all authority and discretion available to them” (a) “to waive, defer, grant exemptions or delay the implementation of any provision or requirement of the [ACA] that would impose a fiscal burden on any State or a cost, fee, tax, penalty, or regulatory burden on individuals, families, healthcare providers, health insurers, patients, recipients of healthcare services, purchasers of health insurance, or makers of medical devices, products, or medications” as well as (b) “to provide greater flexibility to States and cooperate with them in implementing healthcare programs.”
Less than 10 days before his inauguration, Trump pledged to repeal and replace the ACA including the Employer Mandate. Then again, he also previously stated that he would “keep the good parts” of the ACA, which include the prohibition against denying coverage for pre-existing conditions. In any event, while the sweeping language of the Executive Order signals that Trump will stand by his word during his candidacy to repeal the ACA, he offers nothing in his Executive Order to grant the responsible agencies any new authority.
Indeed, the Executive Order disclaims that it will affect any authority already granted by law to an agency and makes clear that any of Trump’s directives that “require revision of regulations issued through notice-and-comment rulemaking, the heads of such agencies shall comply” with the regulatory process. Moreover, such process is unlikely to begin until Trump’s candidates for the applicable responsible agencies, such as the Department of Health and Human Services (HHS), are confirmed.
Notably absent in the Executive Order was the actual details of what part/parts of the ACA Trump intends to seek repeal, let alone his replacement plan.
So, what does this all mean for employers who are subject to the Employer Mandate? Trump’s Executive Order changes nothing for such employers. The Employer Mandate is dictated by Section 4980H of the Internal Revenue Code, and is implemented through IRS Regulations. The IRS is currently issuing penalties under IRC section 4980H for the 2017 tax year with Letter 226J. Employers that have received this penalty notice or any related ACA penalty assessment should seek outside experts.
With respect to future change, the Executive Order clearly suggests that Trump intends to push for state control over healthcare coverage. While Trump has not specified the vehicle of how he intends to give more control to states on healthcare coverage, this could mean that the federal implementation of the ACA could be left to the states, which could result in a patchwork of ACA compliance rules. In other words, this could result in a compliance headache for multi-state employers.
In the meantime, failure to comply with the Employer Mandate could mean severe penalties – both from a failure to offer adequate health coverage to full-time employees and from a failure to report. For an employer of 500 full-time employees, this could translate to over $1 million in penalties for one year for failure to offer coverage, and an additional $500,000 for intentional or reckless disregard of reporting obligations. The IRS remains motivated to collect these penalties to minimize the fiscal burden.
Photography credit: White House
