The Executive Order has three main points, each directing a different organization to revisit restrictions of the Affordable Care Act.
“The order directs the Secretary of Labor to consider expanding access to Association Health Plans (AHPs), which could potentially allow American employers to form groups across State lines.”
If the DOL allowed a broader interpretation of (or changes to) the Employee Retirement Income Security Act, organizations with similar functions could collaborate to purchase insurance at a lower rate. These types of plans would be exempt from many rules governing ACA marketplaces.
“The order directs the Departments of the Treasury, Labor, and Health and Human Services to consider expanding coverage through low cost short-term limited duration insurance (STLDI).”
STLDI is not subject to the majority of ACA provisions and, as such, is generally much less expensive. It is meant to provide gap coverage for participants between jobs or help individuals who missed the open enrollment window. Because STLDI is not subject to ACA consumer protection rules, plans do not cover preexisting conditions and may not cover treatments participants need. The executive order seeks to expand the maximum duration of short-term health insurance, giving those without preexisting conditions a cheaper alternative to marketplace plans.
“The order directs the Departments of the Treasury, Labor, and Health and Human Services to consider changes to Health Reimbursement Arrangements (HRAs) so employers can make better use of them for their employees.”
The executive order seeks to further extend the use of HRAs for small businesses to more easily provide health insurance to employees. HRAs do not count as taxable income under the IRS, and they allow small employers who could not otherwise afford to offer health insurance a means to reimburse employees for premiums and deductibles. However, limitations on HRAs can make this option less attractive to employers.
It’s important to remember that executive orders are a way of showing the administration’s intention and directing agencies to consider making adjustments – this order does not change the Affordable Care Act, which remains in effect.