Choice Stories

November 16, 2017

Impact of Trump Executive Orders and CMS Proposal on Small Business Health Plans

Highlights/Possible Employer Impact – Key Takeaways
  • Employers could claim religious exemption and discontinue coverage for contraception (although legal challenges are pending. (In response to the Pennsylvania Attorney General’s lawsuit, a U.S. District Judge acted on Dec. 15, 2017, to temporarily block the Executive Order to terminate the ACA birth control. Mandate.)
  • New association health plans (AHPs) – likely with reduced benefits – are expected.
  • It’s possible some employers will move from a health plan (covering only their business) to new association plans (with many participating businesses).
  • State could move to change essential health benefits (EHBs) for plans sold within their borders – replacing current national EHBs for ACA-compliant plans.

President Donald Trump’s October 2017 executive orders on health care could shake things up a bit when it comes to health reform and the Affordable Care Act (ACA), but the full impact may not be felt for a while. And the impact on small business private exchanges, like the CaliforniaChoice multi-carrier, employee-choice exchange, could be minimal – at least in the near term.

Under his October 6 executive order, President Trump expanded the rights of non-governmental employers and plan sponsors to deny insurance coverage for contraception to women on the basis of an employer’s sincerely held religious beliefs. The expanded exemption now includes employers who have a moral objection to providing contraception benefits; it permits employers and insurers to avoid the ACA requirement that birth control pills and other contraceptives be covered as part of the ACA’s preventive care benefits. (California updated its health care coverage provision regarding contraception in 2014, retaining a previously adopted out for religious employers. You can read the California law here.)

A second executive order signed in October (that could affect employee benefits) asks government agencies to implement new rules to enable small businesses to band together and get health insurance through the re-establishment of association health plans, which would be subject to fewer benefit requirements than current ACA-compliant plans.


Impact Greater in 2019

Changes proposed under the executive order on association health plans will not occur until federal agencies and Congress write, approve, and adopt new regulations. That process could take months, and include a public comment period. Exempt from federal rules under the ACA, future association health plans could eliminate coverage for mental health, maternity benefits, and pre-existing health conditions. That would certainly give association plans a pricing advantage, but it could also further destabilize the health care marketplace as healthy individuals leave their current employer-sponsored group health plans and individual health plans in favor of less costly coverage.

Another potential change affecting employers is the Trump administration’s proposal to give states increased flexibility when it comes to essential health benefits (EHBs) for plans sold within their borders. The proposed 2019 Notice of Benefit and Payment Parameters, released by the Centers for Medicare & Medicaid Services (CMS) on Friday, October 27, 2017, would allow states to annually set their benchmark plans’ EHBs. It would permit a state to borrow another state’s 2017 benchmark plan – in whole or in part – or create a new plan so long as it follows certain coverage criteria. A state could, for example, keep most of its current EHBs but replace its prescription drug benchmark with one adopted by another state. Stay tuned for updates as insurers and associations work out their planned offerings and pricing in 2018.

Exchange Coverage

The CaliforniaChoice private exchange began more than 20 years as an alternative for small businesses – giving employers and their employees increased coverage and carrier choices, a method for businesses to control their health care costs (through defined contribution), and easy administration (with one bill for all coverage, regardless of how many employees are enrolled in any single plan offered). That will continue, regardless of what may happen with association health plans.

If you want to shop and compare health care options for your employees, contact your broker and ask about the CaliforniaChoice program, which includes coverage from seven different health plans. If you don’t already have a broker, we can help you find one.


Your Beginner's Guide to Choosing a Small Business Employee Benefits Program

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