Alert / Employee Benefits
Five things employers need to know about healthcare policy announcements

Policymakers in Washington, DC have been actively tinkering with healthcare policy over the last several weeks, including House-passed proposals expanding health savings accounts (HSAs) and new short-term limited duration insurance (STLDI) regulations. These and other proposals are certainly intriguing and deserve to be monitored, even if they do not demand immediate action by employers.

1. HSA legislation passes the House; not likely to pass the Senate

A previous Government Relations Alert explained that the House’s tax writing committee approved several changes to HSAs. Last week, the House passed many of the changes favored by the committee. The legislative progress is encouraging; however, the HSA proposals must be approved by the Senate and agreed to by the president before they can become law.

Our conversations last week with Senate staffers and others suggest it is unlikely the Senate will seriously consider the HSA proposals anytime soon. If changes to HSAs are to happen in 2018, we still believe the best opportunity is a yet-to-be-formed package of bipartisan bills that follows the November midterm elections. There is an outside chance that the HSA proposals get added to a government funding bill that must pass in September, but we are hearing very little discussion of that possibility.

2. House punts on Cadillac tax delay and employer mandate suspension

Our previous Alert also explained that the same House committee that supported HSA changes also supported legislation to suspend the Affordable Care Act’s (ACA) employer mandate and further delay the Cadillac tax. The House chose not to vote on those proposals last week. Conversations with lawmakers and their staff suggest these proposals may still be considered by the whole House in September.

That timing lines up with when a measure must pass to fund the government, so we will closely monitor that debate to see if these ACA changes get added to the funding measure. Frankly, the employer mandate suspension is a long shot, considering the funding measure will need Democrat votes and few Democrats have shown a willingness to support the suspension. Another Cadillac tax delay may be a more viable option for the funding measure. Democrats have generally opposed the tax, so adding a delay, or even a repeal, could get more Democrats to support the broader funding measure.

3. Final short-term limited duration insurance regulations have minimal impact on employers

Regulations finalized this week allow health insurers to sell STLDI in the individual market beginning in October 2018. STLDI is skimpier and cheaper than typical individual market health insurance because it’s not subject to the ACA’s consumer protections like the prohibitions on annual limits and pre-existing condition exclusions. The final rules are clear the insurance cannot be offered on a group basis by an employer because STLDI fails to meet several requirements that apply to group health plans.

Accordingly, the new regulations are unlikely to have a meaningful impact on employers. Some employers may choose to highlight STLDI to active employees or COBRA beneficiaries as an alternative to the employer’s group plan. Employers can’t pay for the coverage or reimburse employees for its cost. They would also need to be especially cautious in their communications to avoid even appearing to endorse the STLDI coverage, as endorsement would trigger ERISA requirements on the employer that the policy simply won’t meet.

4. Equal Employment Opportunity Commission wellness program guidance not likely until 2019

The AARP v. EEOC litigation, discussed in our prior Alert, has created uncertainty for wellness program sponsors. It does not appear the EEOC will clarify the uncertainty until a full set of commissioners is in place, which will require Senate approval for two new nominees and one re-nomination. The Senate is choosing to forego much of the traditional August recess to work on approving various presidential nominations, and we were hopeful this would result in a fully functioning EEOC.

Recent conversations with Senate staff and others suggest it is unlikely the EEOC commissioner nominations will be approved until after 2019. Accordingly, wellness program sponsors will likely need to wait until next year to get clarity from the EEOC. Until that time, employers should continue to consider the actions described in our prior Alert.

5. Two states receive approval to establish state-based reinsurance programs funded, in part, by employer plans

The ACA contained a mechanism allowing states to waive certain ACA requirements if the state could prove, among other things, that the state’s plan would not result in more people being uninsured and would not raise costs for the federal government. This week Maine and Wisconsin joined the list of states that have successfully obtained waivers. In both states, the waiver applies to technical insurance requirements with the effect being the states will establish state-based reinsurance programs beginning in 2019.

Employers operating in Wisconsin and Maine will be most interested in how the reinsurance programs are funded. In Wisconsin, the reinsurance program is funded through general revenue. The Maine program, on the other hand, imposes additional fees on carriers and third-party administers, which will inevitably be passed along to plan sponsors. The exact cost increases are not yet determined, but the benefits of a stable individual market may prove well worth the cost of reinsurance.

Scott Behrens, J.D.
Director, Government Relations

Mark Holloway, J.D.
Director, Compliance Services

Not Legal Advice: Nothing in this Alert should be construed as legal advice. Lockton may not be considered your legal counsel and communications with Lockton's Government Relations group are not privileged under the attorney-client privilege.

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