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The Health Care Reform landscape is constantly changing. Keenan’s Health Care Reform Insights will keep you up to date on the latest developments. We will post news items and articles you will find of interest. Check back often for updates.

Health Care Reform Insights

10/17/2017 - Administration Issues New Executive Order

On October 12, 2017, President Trump signed an Executive Order with the stated purpose of promoting health care choice and competition.  The order does not repeal any portion of the Affordable Care Act (ACA) but it does reiterate the Administration’s view that the law has “failed to provide meaningful choice or competition.”

Specifically, the order directs the Departments of Health and Human Services (HHS), Labor (DOL) and Treasury to consider making changes to current regulatory guidance in three areas:

  1. It directs the DOL to consider within 60 days proposing regulations or revising guidance to allow more employers to form Association Health Plans.
  2. It directs all three agencies to consider within 60 days proposing regulations or revising guidance to expand the availability and length of short-term coverage, including making it renewable by the consumer.
  3. It directs all three agencies to consider within 120 days proposing regulations or revising guidance to expand employer use of Health Reimbursement Arrangements, including allowing it to be used with individual market coverage.

The order also directs HHS, in consultation with the DOL, Treasury and the Federal Trade Commission, to report to the President within 180 days and every two years thereafter on steps that can be taken to expand competition and choice in the health care markets.

The order does not change any law or regulation.  It only directs the agencies to consider drafting rules but it does not direct them to adopt any specific rules.  Any proposed rules will need to go through a formal rulemaking process that includes a public comment period, which can take several months.  In the meantime, all statutory and regulatory provisions of the ACA remain in full force.  Employers should continue to administer their plans in full compliance with existing law.

10/10/2017 - Age Rating Changes for 2018

Under the Affordable Care Act (ACA), a small employer is defined as one with an average of at least one but not more than 100 employees on business days during the preceding calendar year and has at least one employee on the first day of the plan year.  The ACA allows only four rating factors to be used for setting premiums in the individual and small group markets – age, geography, family size and tobacco use.  Under California law, only three rating factors may be used – age, geography and family size.  California does not allow tobacco use rating.

For plan years beginning in 2018, the age rating for children in the individual and small group markets is changing.  Previously, regulations issued by the Centers for Medicare & Medicaid Services required the use of a single age band covering children 0 to 20 years of age.  The regulations have been amended for plan years beginning in 2018 to require the use of a single age band for ages 0 through 14 and one-year age bands for ages 15 through 20.  The rating factors also increase for all children – from the current 0.635 factor to a range of 0.765 to 0.970 depending on the age of the child.  As a result of these changes, those buying coverage in the individual and small group markets are likely to see notable premium increases for family coverage.

10/4/2017 - 2017 IRS Forms 1095-C Now Available

The Internal Revenue Service (IRS) has released the final version of Forms 1094-C and 1095-C for the 2017 reporting year along with Instructions for Forms 1094-C and 1095-C.  As a reminder, these forms are used by employers who must report on their full-time employees under Internal Revenue Code Section 6056.  While the forms are substantially similar to the 2016 versions, there are some things worth noting:

  • On Form 1094-C, line 22, box C is now designated “reserved” rather than “Section 4980H Transition Relief.” Also, Part III, column (e) is designated “reserved” rather than “Section 4980H Transition Relief Indicator.”  This is because certain transition relief that was available under Internal Revenue Code section 4980H for 2016 is not available for 2017.
  • On Form 1095-C, the “Plan Start Month” box remains optionalfor 2017.
  • Per the instructions, Forms 1095-C that are filed with incorrect dollar amounts on line 15 for the “Employee Required Contribution” may fall under a safe harbor for certain de minimis errors. The safe harbor generally applies if no single amount in error differs from the correct amount by more than $100.  If the safe harbor applies, the employer will not have to correct Form 1095-C to avoid penalties.  More information on the safe harbor is available in IRS Notice 2017-9.
  • For Form 1095-C, line 16, the instructions clarify there is no specific indicator code that an employer should use for a full-time employee waiving coverage.

The deadlines for reporting are just a few months away.  Forms 1095-C must be provided to employees by January 31, 2018.  If filing electronically with the IRS, Forms 1094-C and 1095-C are due by April 2, 2018 (since March 31st falls on a Saturday).  Employers filing less than 250 Forms 1095-C may file paper returns, which are due to the IRS by February 28, 2018.

9/27/2017 - Latest ACA Repeal Effort Shelved

Senate Republicans announced they will not vote this week on their latest proposal to repeal and replace the Affordable Care Act (ACA).  The Graham-Cassidy bill ran into many of the same obstacles as previous bills – more conservative members want to see the ACA repealed as much as possible but more moderate members are concerned about the impact on their constituents, especially with regard to changes to Medicaid.  Finding a way to balance these competing concerns has proven to be a challenging obstacle for Senate Republicans.

Does this mean repeal is finally dead?  It is for now.  The current budget reconciliation process under which Republicans were attempting to pass repeal and replace legislation without Democrat support expires on September 30, 2017.  But if we have learned anything over the last nine months, it is this – even when it looks like repeal has failed, it has managed to come back from the dead over and over again.

9/20/2017 - It’s Alive – ACA Repeal Efforts Back from the Dead

Like a zombie in a low budget horror movie, Republican efforts to repeal and replace the Affordable Care Act (ACA) are back from the dead.  Once again.

Less than two months ago, Senate Republicans fell short of their goal to repeal the ACA after Sen. John McCain (R., AZ) joined Sens. Susan Collins (R., ME) and Lisa Murkowski (R., AK) plus all 48 Democratic Senators in defeating a so-called “skinny” repeal by a vote of 49-51.  The “skinny” repeal was a last ditch effort after two other repeal efforts failed to pass that same week.  At that point, it looked as though Republican efforts to repeal the ACA were not just stalled but were effectively dead in the water.

Enter Sens. Lindsey Graham (R., S.C.) and Bill Cassidy (R., LA).  The two worked to put together a proposal that was, until very recently, not garnering much support.  But with a September 30th deadline approaching to pass any repeal legislation through the budget reconciliation process, the proposal is now gaining traction.

Essentially, the proposed legislation would convert the ACA’s tax credits, subsidies and funding for Medicaid expansion into block grants to states through 2026.  Each state would have discretion on how to use the funds.  For example, some might decide to use it to set up high-risk pools or reinsurance programs while others might use it to lower out-of-pocket costs.  States would also have discretion to waive many of the ACA’s consumer protections, such as the prohibition against preexisting condition exclusions.

Supporters of the legislation argue it will return power to the states and give them greater flexibility to create solutions for their particular needs.  Opponents are concerned because states that expanded Medicaid under the ACA, such as California, New York and Massachusetts, will see significant cuts in funding whereas states that chose not to expand Medicaid, such as Texas, Florida and Georgia, will see significant increases in funding.

Majority Leader Mitch McConnell (R., KY) recently announced the Senate will vote on the legislation next week.  The Congressional Budget Office has yet to release its estimate of the effects of the legislation on the budget or on the number of uninsured; however, it stated it will not be able to provide a full analysis before the scheduled vote.  With the repeal zombie living to see another day, many are now scrambling to understand the potential impact of the legislation and some are probably wondering what it takes to actually kill a zombie.