After Donald Trump’s surprising upset in the presidential race, the question for employers is: Just what will a President Trump mean for healthcare and employee benefits? For one, it means another battle over the Affordable Care Act.
“With Donald Trump in the White House, we can expect that every element of Obamacare will be challenged,” says Mike Thompson, president and CEO of the National Alliance of Healthcare Purchaser Coalitions.
Trump, who has repeatedly called for the ACA’s repeal, has proposed getting rid of the exchanges and setting up tax-free health savings accounts for people with high-deductible insurance plans. He also has said he will set up state-based high-risk pools for people with medical conditions that make it hard to get coverage on their own. He also wants to allow companies to sell insurance across state lines to boost competition and drive down prices.
Others have their doubts that Trump can follow through on his promise to repeal President Obama’s signature policy. But with Republican support and with recent pressure on the ACA due to rising costs and the withdrawal of several major insurers, Trump may be able to dismantle certain pieces of the ailing law.
“There have been unambiguous messages from this campaign about repealing the ACA,” says Katherine Hempstead, senior advisor at the Robert Wood Johnson Foundation. “A complete repeal would be difficult to accomplish, but there are ways that the law could be weakened.”
Still, not every piece will go, observers said.
“There are multiple elements that are unlikely to be rolled back, such as coverage of children to age 26 and coverage of pre-existing conditions in general,” says Thompson.
Industry insiders predict that the law’s unpopular Cadillac tax – a 40% excise tax on employer plans exceeding $10,200 in premiums per year for individuals and $27,500 for families – will be one of the first targets of the Trump administration. Despite a contentious election, Trump and Clinton agreed on one thing: killing the tax.
Trump may also draw on a plan proposed by Republicans in the U.S. House of Representatives that includes a refundable tax credit to help Americans buy individual plans. He also wants to eliminate the law’s individual mandate that requires Americans to buy health insurance or face a penalty.
Other issues
Thompson says another important issue for the president-elect to address is the continuous rise in healthcare costs. “Addressing healthcare costs more broadly will be critical, both for employers and to sustain our healthcare safety net programs,” Thompson says, adding that rising prescription drug prices also will be a major focus.
Under a Trump presidency, employees may become more familiar with health savings accounts. That’s because the Republican promotes the use of HSAs and specifically would allow tax-free transfer of HSAs to all heirs. Employers also can expect Trump to focus on parental leave and childcare. He was one of the first Republicans to have such a platform.
He promises “six weeks of paid maternity leave to any mother with a newborn child whose employer does not provide the benefit.” His plan, as outlined on his website, does not mention if the policy applies to same-sex parents. He says his maternity leave policy will be completely paid for through the unemployment insurance program.
Additionally, Trump’s childcare policy allows families with a stay-at-home parent to deduct the average cost of childcare from their taxes through an Earned Income Tax Credit (EITC). “For low-income individuals who have no net income tax liability, we will offer an expanded earned income tax credit in the form of a childcare rebate,” he says. “Working parents can get an expanded EITC benefit that equals up to half of their total payroll tax, a major relief for low-income parents.”
In general, says Lisa Horn, director of congressional affairs at the Society for Human Resource management, employee benefit programs will be under scrutiny under a new president.
“Because many employee benefits enjoy a tax-free status – employer-provided health care and employer-provided retirement account for the largest annual loss in revenue to the federal treasury – it is likely that there will be a close examination of employer-sponsored fringe benefits,” Horn says. “[That includes] retirement plans, healthcare benefits and educational assistance programs as any part of tax reform efforts in Congress.”
For now and in the short run nothing changes. The mandates for both the individual and employer still apply, the rules implemented over the last 6 plus years are still in place, and the fines for not complying are still applicable. If and when something changes we will be sure to keep you informed.
