Trump Acts to Exempt Some Employers from ACA’s Contraception Coverage Requirement, Proposes New Association Health Plans

Highlights/Possible Individual or Business Impact – Key Takeaways

  • End of cost-sharing reduction subsidies (if not overturned by court), higher rates for individuals getting coverage through federal and state marketplaces (especially those not qualifying for CSR)
  • Employers could claim religious exemption and discontinue coverage for contraception (although legal challenges are pending)
  • Introduction of new association health plans (AHPs) – likely with reduced benefits – in 2018
  • Possible exit of healthier individuals from individual market and move to AHPs
  • Likely increase in rates for those with pre-existing health conditions
  • Employers could move from group plans (covering only their group) to association plans

    President Donald Trump announced in October plans to immediately end the cost-sharing subsidies for individuals who purchase health insurance through and the Covered California and Nevada Health Link state exchanges set up as part of the Affordable Care Act (ACA).

    The White House threatened for months it would cut-off the subsidies, which go to insurers to help eligible consumers (earning up to 250 percent of the Federal Poverty Level) afford their health coverage. Ending the subsidies could give insurers in the federal and state exchanges the option to back out of their government contracts, although it’s not known right now what the insurer response may be to the president’s action.

    Open enrollment for 2018 coverage began November 1, 2017. For the federal exchange participants (and for most state exchanges), the cut-off for enrollment in coverage for 2018 is mid-December. Covered California’s open enrollment started November 1st and continues through the end of January 2018 (although applications received after 12/15/17 will be effective either February 1, 2018, or March 1, 2018.)

    President Donald Trump’s October executive order regarding the establishment of new rules for association health plans will give small businesses in the same industry the opportunity to band together to secure employee health benefits.

    While the idea sounds attractive, health reform experts say the resurrection of association health plans will likely further erode the consumer safeguards of the ACA. That’s because the new plans will not have to provide the “essential health benefits” called for under health reform.

    Association health plans would, instead, only have to comply with the state guidelines where the plan is filed, not the more-restrictive guidelines that apply in some states. Opponents say it will create a “race to the bottom” as insurers file stripped-down plans in states with the fewest regulations when it comes to what is (and what is not) covered.

    Critics forecast these less generous plans will draw healthier people out of the traditional health insurance market with lower prices, leaving other plans with sicker enrollees, which could further drive up premiums, especially for those with pre-existing conditions.

    The other October executive order signed by the president expands the rights of employers to deny insurance coverage for contraception to women on the basis of the employer’s religious liberty. The new rules broaden the range of employers and insurers that can now invoke religious or moral beliefs to avoid complying with the ACA requirement that birth control pills and other contraceptives be covered by most insurance plans as part of the ACA’s preventive care benefits.

    Several state attorneys general, including California’s Xavier Becerra, are pursuing action to block the contraception policy change. The attorney general and the ACLU allege the new rules violate the First Amendment by discriminating against women and favoring the rights of certain religious views without adhering to correct government procedures.

    We will continue to follow the matter and will share updates on the legal challenges as well as other ACA changes affecting brokers and clients.

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