On Thursday, President Trump signed an executive order urging the Department of Labor to consider expanding access to association health plans, including small businesses and individuals. This could potentially allow American employers to purchase health insurance across state lines. The executive order also urges the Departments of Labor, Health and Human Services, and Treasury to consider changing health reimbursement account (HRA) rules, as well as consider expanding coverage through low-cost short-term limited-duration insurance policies.
There is no immediate impact of this executive order. Employers, small business owners, and association plan participants should continue operating under current laws and stay tuned for further legal developments.
Association Health Plans Potentially Not Subject to Affordable Care Act Requirements
Association health plans are currently governed by state laws and generally consist of trade organizations or interest groups. The executive order urges expanding access to association health plans, including small businesses and individuals.
Additionally, the Department of Labor could amend the regulations so that association health plans would no longer be subject to State regulation or Affordable Care Act requirements, potentially allowing American employers to purchase health insurance across state lines. This could also allow association health plans to deny coverage to the group or set rates based on the medical history of those in the group, so plans with younger, healthier members could offer lower premiums.
HRAs: Potential Use to Pay for Individual Policies
The executive order urges changes to health reimbursement accounts, potentially allowing employers to give workers funding to pay premiums for health policies in the individual market. Affordable Care Act regulations explicitly forbid the practice, but that could potentially change, here.
Short-Term Limited Duration Insurance Policies
The executive order urges expanding coverage through low-cost short-term limited-duration insurance policies, including lengthening the coverage period, currently limited to 90 days, and allowing renewals of the policies. These plans are not subject to Affordable Care Act requirements and generally exclude pre-existing conditions and provide less comprehensive coverage than other policies.
First, there is no immediate legal effect from this executive order. Any changes to law would be made through regulations from the above named agencies. Additionally, many states have expressed intention to file lawsuits against this executive order and its potential outcomes. Employers, small business owners, and association plan participants should continue operating under current laws and stay tuned for further legal developments.
Editor's note: The above analysis is courtesy of Pope Law Firm.