Employers can look forward to a brighter future with the return of a business-friendly Trump administration. This leadership shift brings the potential for much-needed relief for businesses burdened by federal regulations and the complexities of managing group health insurance plans. 

As policymakers work to navigate the challenges of reducing our national debt, healthcare reform is once again on the horizon.  Anticipated changes are set to offer greater flexibility and choice for organizations who offer employee benefits. 

The Affordable Care Act: What May Happen?   

In contrast to Trump’s first term, dedicating resources to repeal and replace the ACA is unlikely during Trump 2.0.  This time, the focus appears to be shifting toward making adjustments to specific “segments” of the ACA, rather than another attempt to completely dismantle the law. 

An easy starting point could begin with simplifying or even eliminating ACA large employer requirements.  Applicable Large Employers (ALEs) must transmit annual data to the IRS outlining details about their employees’ health coverage.  This information helps enforce the employer shared responsibility provision that requires an ALE to offer “affordable and compliant” medical insurance, or incur hefty penalties (aka ACA pay or play).  Potential relief from this obligation comes at a timely moment, as Michigan’s Earned Sick Time Act will be contentiously launched the 21st of February. 

Further stepwise alterations could include rolling back full-time eligibility to its original 40 hours per week or adjusting eligibility based on regularly scheduled hours.  Moreso, efforts to grant states autonomy in administering federal regulations may be emerging.  This could allow states to modify or even opt out of certain ACA requirements, including specific components of the 10 Essential Health Benefits.

Healthcare Alternatives: A New Horizon

Term one, President Trump showed a willingness to explore new pathways for healthcare, including Individual Coverage Health Reimbursement Arrangements (ICHRA) and Association Health Plans (AHP).  Term two, developing upon these alternatives could serve as a crucial catalyst, bolstering recruitment and driving talent acquisition.

What is an ICHRA? An employer-funded benefit that allows businesses to reimburse employees for their qualified medical expenses and individual medical premiums.  Employees who maintain their own health coverage, that best meets their personal needs, would no longer rely on furnished mono-option group programs.

This is particularly advantageous for small and medium-sized businesses that may struggle with group health programs.  ICHRAs present an attractive, cost-effective way to offer health benefits, by way of providing tax-free dollars from reimbursement and giving employees choice and flexibility.

It is highly probable that Republicans will seek to codify ICHRAs into law.  Transitioning the ICHRA framework to a statutory basis would significantly increase stability and provide reassurance to those uncertain about adopting this type of benefit.

The new administration may also aim to reinstate Association Health Plan (AHP) rules, which were reversed by the Biden Administration.  AHPs were designed to enable unrelated small employers and the self-employed to join together for health coverage, aiming to reduce premiums and expand access to a broader selection of options.  In essence, AHPs are a viable solution for providing comprehensive health insurance, bypassing some of the constraints found in the individual and small-group markets.

Savings Account Expansion and Wellness: 2.0

Incoming policymakers may advocate to widen the adoption of Health Savings Accounts (HSAs), recognizing their potential to offer both employers and employees greater flexibility in managing healthcare.  By increasing contribution limits and expanding upon qualified expenses (current version: IRS Publication 502), these changes could spur individuals to save more while benefiting from tax advantages.  For employers, this could extend solutions that support workforce health needs, while employees gain more control over their spending and savings. This approach aligns with efforts to build a more efficient, consumer-driven healthcare system that encourages personal responsibility in managing costs.

Additionally, we may see the introduction of new benefits, such as Dependent Care Savings Accounts (DCSAs), which would empower employees to save and invest for child and elder care expenses.  The escalating price tag of dependent care has outpaced the available pre-tax benefits provided by Flexible Spending Accounts (FSA). With Trump’s support for working parents, there could be greater opportunity to develop worthy dependent care benefits, modeled after the structure of HSAs, and delivering the same triple-tax advantages.

Future policy changes could encourage employer-sponsored wellness programs by offering financial incentives like tax credits and deductions. These programs would not only address physical health but also emphasize mental well-being.  The goal would be to improve health and create a more productive workforce.

Stay tuned Traverse City, it is going to be an exciting year!  The landscape of employee benefits is on the brink of transformation.  Key changes will focus on expanding choices while easing restrictive insurance regulations that have hindered employment.  This shift will give businesses more room to innovate and maintain competitiveness.