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ACA UPDATE: How will the ACA change in 2017?

Employee Benefits

Key areas for employers to watch

On Friday January 20, 2017, the United States government will experience the customary transition of power as Donald J. Trump is inaugurated as the 45th President of the United States. The election of Mr. Trump, coupled with the Republican Party retaining control of both legislative bodies of the federal government, has the future of the Affordable Care Act (ACA) under great uncertainty.

The one thing we know is that experts and pundits will make speculation about the law’s future a hot topic in the coming days. Rather than adding to speculation about specific changes that could be made to the ACA, we want to share the processes for changing federal law and identify how potential changes could affect employer benefit strategies moving forward.

Process.

There are four primary processes that can be used to change a federal law or regulation. Those processes are:

  • Legislation – Normal legislation can be passed by the legislative branches of government (House of Representatives and U.S. Senate), which is then sent to the executive branch (President) to be signed into law. This process includes a technicality called a “filibuster” in the U.S. Senate, in which a bill must have 3/5th approval (60 votes) to be eligible for a vote.
  • Reconciliation process – Reconciliation is a legislative process that allows bills with budget ramifications to be considered in the Senate regardless of traditional rules. Such legislation only require a simple majority approval and are not subject to the filibuster process.
  • Administrative Rule – The implementation of federal laws are generally handled by federal agencies. A change in administration will mean that the federal administrators will likely interpret and enforce existing law in a different manner than a prior administration.
  • Executive Order – An executive order is an order from the President, which has the full effect of law. Generally such orders are utilized to direct internal affairs of government rather than legislative action.

Implementation.

The actual implementation of federal regulatory changes can be done in two methods. Those methods are:

  • Immediate action – This happens when a law or regulation goes into effect the day that it is signed into law or implemented by an agency.
  • Delayed action – Delayed action occurs when a law or regulation goes into effect on a specific date in the future, to allow for proper implementation.

Ramifications.

As an employer, the key to any change is how it will affect the offers of health insurance coverage you offer employees. Here are some potential areas of the law that could experience change and things to watch for regarding those provisions of the ACA as we know it today:

  • Mandates/Penalties – The ACA currently has a mandate for individuals to maintain health insurance coverage. The law also requires employers to offer a certain level of health insurance coverage to employees in order to avoid penalties. Changes to these requirements could have ramifications for employer reporting, employer shared responsibility and coverage fines.
  • Marketplace – Currently the ACA makes an insurance exchange, known as the Marketplace, available for individuals to obtain health insurance. Changes to this market could have ramifications for small employers (under 50 FTEs) and employer post-employment strategies.
  • Funding – The federal government currently leverages fees and taxes to pay for the administration of the ACA. Any changes to the funding mechanisms of the ACA, such as the Cadillac Tax, could open the door for the federal government to seek different revenue streams.

Key Takeaway

While no one specifically knows what the future holds for the Affordable Care Act, we do know that the law has seen continuous change since being signed into law in early 2010. We hope that this overview of the regulatory process and key provisions help you to better understand news coming from Washington D.C. as the Presidential transition occurs and new laws are passed.

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