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Health Care Reform Update

February 10th, 2017

Forecasting Changes to the ACA: First up, President Trump’s Executive Order

This update is part of a Brown & Brown series summarizing new guidance issued in connection with the Patient Protection and Affordable Care Act (also known as the ACA or Health Care Reform).

We are joining forces with our business partner, the law firm of Miller Johnson, to provide these updates to you.

For this edition, we change course and start exploring possible changes to, including an outright repeal and replacement of, the ACA. We begin by reviewing President Trump’s Executive Order entitled “Minimizing the Economic Burden of the Patient Protection and Affordable Care Act Pending Repeal” (Executive Order 13765 of January 20, 2017, which is available at: https://www.gpo.gov/fdsys/pkg/FR-2017-01-24/pdf/2017-01799.pdf#page=1).

Executive Order Overview

President Trump’s Executive Order (“E.O.”) is divided into six different sections.

Here is a brief summary of those sections:

Section 1 confirms President Trump’s intent to “seek a prompt repeal of the [ACA].” While the repeal is pending, the E.O. states that “it is imperative for the executive branch to … take all actions consistent with law to minimize the unwarranted economic and regulatory burdens of the [ACA] and prepare to afford the States more flexibility and control to create a more free and open health care market.”

Section 2 is the section of the E.O. that is most applicable to employers. This section authorizes the Secretaries of Health and Human Services (“HHS”) and—while not expressly named—the Treasury (including the IRS), and Labor to “waive, defer, grant exemptions from or delay the implementation of any provision or requirement of the [ACA] that would impose … a cost, fee, tax, penalty, or regulatory burden on” the following:

  • Individuals
  • Patients
  • Families
  • Recipients of health care services
  • Healthcare providers
  • Purchasers of health insurance (presumably including employers)
  • Health insurers
  • Makers of medical devices, products, or services.

Section 3 instructs the Secretary of HHS and the heads of all applicable Executive departments and agencies to provide flexibility to and cooperate with states in implementing healthcare programs.

Section 4 instructs the Executive departments and agencies to “encourage the development of a free and open market … for offering of healthcare services and health insurance, with the goal of achieving and preserving maximum options for patients and consumers.”

Section 5 authorizes the issuance of regulations through normal procedures to carry out the directives of the E.O. (In a subsequent Executive Order, President Trump required the repeal of two regulations for every new regulation issued. This means that each regulation issued under this E.O. requires the repeal of two existing regulations.)

Section 6 states that the E.O. is not intended to impair the authority of any of the Executive departments or agencies or grant any new rights or benefits to any party.


Here are our observations about what guidance this E.O. gives and does not give to employers regarding the ACA:

Guidance that this E.O. gives:

  • The E.O. confirms the Trump Administration’s intent to repeal and replace the ACA as quickly as possible.
  • The E.O. grants the applicable Executive departments and agencies discretion with respect to the enforcement of the ACA. However, the extent of this discretion is unclear. And, until the Secretaries of HHS, Treasury and Labor are confirmed by the Senate, it is unlikely that these departments will issue guidance offering relief from the enforcement of the ACA.
  • The E.O. confirms the Trump Administration’s goal to allow the sale of health insurance across state lines. However, before this goal can be achieved, there a number of legislative changes at both the federal and state level that must be accomplished.
  • Guidance that this E.O. does not give:
    The E.O. does not (currently) appear to relieve employers from complying with any of the ACA’s requirements for employer-sponsored group health plans, whether fully insured or self-funded.
  • This E.O. does not appear to allow the waiver of the excise tax under the ACA’s Employer Shared Responsibility Provision (a/k/a the “pay or play penalty”). Even though the pay or play penalty is an “excise tax” (and the E.O. grants the waiver of any “tax”), the E.O. does not “expressly” grant relief to “applicable large employers” that are subject to the pay or play penalty.
  • This E.O. does not appear to provide employers with relief from any required reporting (e.g., Forms 1094-C and 1095-C) because it doesn’t appear to allow the waiver of the excise tax imposed for reporting failures.

We are actively monitoring all developments related to the ACA and will provide periodic updates. Rest assured, we will continue to update you as more details emerge. When we know, you will know.

Contact one of our dedicated Benefit Advisors, with any questions.

Source: Brown & Brown & Miller Johnson 

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