Regulatory Changes to the ACA

Now that efforts to repeal and replace the Affordable Care Act (ACA) are on hold, the Trump Administration is in the process of making a number of regulatory changes.

The Departments of Health and Human Services, Labor and Treasury have issued interim final regulations allowing employers to decline to cover contraceptives under their health plans based on a religious or moral objection.

The ACA has required non-grandfathered group health plans to cover women’s contraceptives with no cost sharing, with a broad exception for religious employers (churches) and limited exceptions for nonprofit religious organizations, like hospitals and schools and closely-held for-profit entities.

The new regulations were effective immediately and have two parts, one covering employers with moral objections and one for those with religious objections.

The Departments were sued within hours of the release of the regulations by the Attorneys General of California and Massachusetts and the American Civil Liberties Union, alleging that the regulations violate the Administrative Procedures Act, the Establishment Clause of the First Amendment and the Equal Protection guarantee implicit in the Fifth Amendment.

Under the limited exceptions for religious organizations and closely-held for-profit entities, employers did not have to pay for contraceptive coverage, but employees could still receive contraceptives with no cost-sharing through the insurance company or third-party administrator. Under the new regulations, employers can decide whether employees will receive contraceptives with no cost-sharing.

Publicly traded companies are not eligible for the moral exemption. The regulations do not address how to document eligibility for the new exemptions. The Departments are accepting written comments until December 5, 2017.

In many states, contraceptive coverage is mandated by state insurance laws. Employers wishing to take advantage of the new exceptions may face lawsuits from plan participants. Employers should seek legal counsel before making any changes related to contraceptive coverage.

The Trump Administration has also made a number of changes to the open enrollment process, including:

  • The open enrollment period for federally facilitated marketplaces will be cut in half, going from November 1 through December 15, instead of January 31. Some state-run Exchanges, such as California, will continue to have open enrollment through January 31.
  • Money for advertising has been cut by 90 percent.
  • Money for navigators who guide people through the enrollment process has also been reduced.
  • The website will be unavailable Sunday mornings.
  • If someone who had dropped coverage enrolls, they will need to pay the unpaid premiums from the past year.

Special enrollment periods are available between open enrollment periods when people experience certain events, such as losing other coverage or moving to a new area. Documentation of these changes will now be required.

The Trump Administration also announced that it would stop making cost-sharing reduction payments to insurance companies.

Most insurance companies raised premiums in anticipation of this change. Because subsidies for people making less than 400 percent of the federal poverty level are based on the level of premiums, this increases the subsidies.

The subsidies are based on the Silver plan, but individuals can apply the subsidy to other plans. In many counties around the country, the subsidies will now be so high that people can sign up for a Bronze plan and the subsidy will make the coverage free.

Bronze plans typically have deductibles of several thousand dollars, but when faced with a choice of paying a penalty for not having coverage or getting free coverage, it should be an easy decision.

The Centers for Medicare & Medicaid Services has also released proposed regulations that would make a number of other changes to the ACA, including changes to the Small Business Health Options Program, giving states more flexibility regarding the definition of essential health benefits, changes to the medical loss ratio rules, changes to the risk adjustment program and much more.

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John Garner

About John Garner

John Garner has over thirty five years of experience in employee benefits. He specializes in compliance, health care reform, the Health Insurance Portability and Accountability Act (HIPAA), the Consolidated Omnibus Budget Reconciliation Act (COBRA), and the Employee Retirement Income Security Act (ERISA). He helps clients with life, health, and disability benefits, cost containment, flexible benefits, and claim consulting.

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