President-elect Donald Trump has announced a 7-point healthcare plan that he intends to implement early in his administration. Briefly, the seven points are as follows:
- Complete repeal of the Affordable Care Act.
- Allow sale of health insurance across state lines.
- Elimination of the current threshold percentages (10% for most taxpayers and 7.5% for seniors) for deduction of medical expenses on individual tax returns.
- Expand the allowable use of health savings accounts (HSA’s) beyond the employment relationship. Contributions would be tax-free, allowed to accumulate, and could be passed on to heirs.
- Require price transparency from all medical providers to allow individuals to price-shop for medical care.
- Medicaid block-grants to states.
- Remove barriers to entry into free markets of safe and reliable drug products, including allowing consumers to import such drugs from outside the country.
What does this mean for U.S. and Illinois employers? In the short run, not much. Both proponents and opponents of the 7-step healthcare plan must remember that, at least for now, the Affordable Care Act (the “ACA”) is the law. And there are important deadlines under the ACA that employers are required to meet, very likely before any repeal of the ACA could be fully effective. The reporting requirement forms – Forms 1094-C and 1095-C – are due to be filed in early 2017 just as they were required to be filed in 2016. For paper filers, the forms are due to be filed by February 28, 2017. For electronic filers, the filing deadline is March 31, 2017. For applicable large employers (ALE’s), a copy of Form 1095-C must be furnished by the employer to each full-time employee by January 31, 2017 (11 days after the inauguration of President Trump). In addition, all employers who provide employer-sponsored health insurance coverage for their employees are required, in conjunction with their tax and payroll service providers, to report the dollar value of that coverage for 2016 purposes in Box 12 of Form W-2.
It is also noteworthy that any change in the law, including a complete repeal of the ACA, almost certainly will not affect the benefits and coverage afforded by health plans and policies in effect at the time of repeal. Any such change, we expect, would be effective at the end of the plan year or policy period and would be reflected, for example, in the coverage and benefit choices offered by health insurers for plan years and policy periods beginning after the new legislation takes effect.
In the long run, the changes in the nation’s healthcare system are very difficult to forecast. First, we do not know whether Congress will approve a complete repeal of the ACA or whether it will pass a compromise bill that repeals parts and saves other parts of the law. Second, we don’t know the timetable for repeal and replacement. It could be immediate and complete, as the President-elect has stated, or it could be phased in over a period of time. Third, the timetable for implementation of the other points of the 7-point plan is dependent in large part on the timetable for repeal and replacement of the ACA.
Because there is so much that we don’t know, employers should continue to regard the ACA as the law and comply with its requirements, while at the same time adopting a wait-and-see attitude with respect to the implementation of changes in the law. Ancel Glink and the Workplace Report will keep you advised of changes as they occur.