Just under 1,000 guests attended a special Ceridian Webcast April 5 on compliance change and the first 100 days of the Trump Administration.
Speakers focused on efforts of the President and congressional Republicans to repeal and replace the Affordable Care Act (ACA); the outlook for new federal overtime rules; and state initiatives on paid leave, retirement and fair scheduling.
On changing the ACA, webcast attendees learned that while the 2010 healthcare reform law has problems, lawmakers must take into account that it’s working for 20 million Americans enrolled in Medicaid and the federal or state insurance exchanges. Answers to the webcast’s first polling question reflected this, with 39 percent favoring repeal and replace and 53 percent urging only minor changes in ACA.
Discussion then turned to the American Health Care Act (AHCA), the Republican alternative to ACA. The bill would replace ACA’s income-based premium subsidies with age-based tax credits; roll back ACA’s Medicaid expansion; “zero-out” penalties for the individual and employer mandates, effectively repealing both; simplify employer reporting; delay the “Cadillac Tax” until 2025; repeal the ACA Medicare tax increase; and retain the ban on pre-existing condition exclusions and the eligibility of children to enroll in parents’ health plans up to age 26.
With Republicans holding a 237-193 majority in the House of Representatives, the leadership’s American Health Care Act seemed on a fast-track for approval. However, the legislation hit a speed bump March 24 when conservative and moderate Republicans announced opposition, meaning AHCA lacked majority support. Speaker Ryan and President Trump agreed to “pull the plug” on the bill, putting off a final vote.
The Ceridian webcast offered two reasons many Republicans were unable to support their leadership’s legislation. One, the day before the scheduled vote was, ironically, the seventh anniversary of President Obama’s signing the ACA into law. The anniversary highlighted that since 20 million Americans benefit from ACA lawmakers must take care not to pull the rug out from under them.
Two, the nonpartisan Congressional Budget Office (CBO) delivered a knockout blow when it reported March 13 that, for a variety of reasons including the cutbacks in Medicaid and repeal of the individual mandate, 24 million more Americans would be uninsured ten years from now if AHCA were to become law.
The implication seems obvious: lawmakers may revise, reduce, re-design or restructure the Affordable Care Act; but they will not completely repeal it. The 2010 healthcare reform law is now cemented in place—like the Social Security Act, ERISA and the Fair Labor Standards Act. It can and will be amended, perhaps often, but it will not disappear.
After he pulled the plug on the AHCA, House Speaker Paul Ryan said, “Obamacare is the law of the land for the foreseeable future,” signaling a delay in efforts to repeal and replace ACA.
Ceridian webcast attendees were informed that with the spotlight now off AHCA, attention shifts to the ACA’s good news and bad news. What’s good, of course, is that ACA has extended health insurance to millions and the uninsured rate has fallen to an all-time low of 10 percent.
But there’s also bad news: 2017 insurance premiums in the individual market skyrocketed on average 25 percent; exchange risk pools skew heavily toward older and sicker people; insurers are scrambling for the exits, with 960 counties offering only one plan; and this year, for the first time, enrollment in ACA exchanges dipped.
In short, ACA exchange marketplaces are fragile. Indeed, if recent trends persist, the exchanges may not be sustainable. Which prompts a series of questions: if the exchanges become unstable will President Trump rescue a law he opposes? Will HHS allow premium subsidies to keep flowing? Will the White House bail out money-losing insurance companies? Will IRS enforce an individual mandate Republicans oppose? These “next steps” are all difficult questions President Trump will need to answer in the wake of AHCA being put on ice.
Two words, compliance uncertainty. The AHCA, which would have repealed the employer mandate and simplified reporting, is off the table for now. And only time will tell whether the Trump Administration can save the ACA if the wheels come off this year.
With the fate of both AHCA and ACA uncertain, employers are reminded of President Trump’s Inauguration Day Affordable Care Act Executive Order. The order directs HHS, IRS, DOL and other agencies to “waive, defer, grant exemptions from, or delay implementation of” any provision (italics added) that would “impose a fiscal burden…or cost, fee, tax, penalty, or regulatory burden” on just about anyone affected by the 2010 law.
In the wake of the failed ACA repeal and replace saga, employers will look to federal agencies that administer the healthcare reform law for regulatory relief. Perhaps certain penalties or deadlines might be modified, or definitions of good faith compliance interpreted more broadly, or regulatory enforcement relaxed, particularly for smaller businesses. To the extent the law affords discretion, agencies might grant exemptions or waivers on costly compliance mandates.
Seven years on, many employers still find Affordable Care Act compliance challenging. Relief was in sight from the AHCA but that proved fleeting, at least for now. The January 20 Executive Order may allow agencies greater flexibility to interpret existing rules. At the end of the day, however, employers understand that only a bipartisan legislative compromise can produce a sustainable solution on health policy—and on compliance.
The webcast then turned to the outlook for the Obama Administration’s final rule on overtime eligibility.
Recapping the status, on November 22, 2016, just a few days before it was to go into effect, a federal judge declared the final rule unlawful and enjoined the U.S. Department of Labor (DOL) from enforcing it. Doubling the salary threshold for exempt workers, reasoned the judge, essentially created a “salary-only test” for the overtime exemption, something only Congress has the power to do.
The difficulty for employers is that many had already taken steps to comply with the final rule—as confirmed by the results of the webcast’s second polling question.
Employers who have raised salaries, reclassified workers or modified schedules to avoid unplanned overtime costs now find themselves in compliance “limbo.” Adding to the uncertainty, in the waning days of the Obama Administration DOL appealed, asking the district court to throw out the injunction and allow the rule to take effect.
But the court did not rule on the appeal before January 20 and the incoming Trump Administration now must decide whether to drop the appeal—as most observers expect they will.
The new Secretary of Labor, when confirmed, is expected to address the overtime issue as an immediate priority. One scenario is that DOL will withdraw the appeal, allow the injunction to stand, and propose a new FLSA overtime rule, presumably with a salary threshold in the mid-30’s range. The process of new proposed rules, public comment and issuance of a final rule could extend well into 2018.
Meanwhile, employers who have already implemented the now-enjoined standard hope for helpful guidance from the government on what they should do—helpful, that is, in escaping overtime rule compliance limbo.
One of the most interesting parts of Ceridian webcasts is the question and answer period and the April 5 webcast was no exception. Attendees asked great questions and we have space for two (paraphrased):
Larry Levitt of the Kaiser Family Foundation explains that community rating means “everyone pays the same premium for the same insurance policy in a geographic area, regardless of their health,” while guaranteed issue requires insurers “to accept everyone, even those with pre-existing conditions.” ACA allows “adjusted community rating,” i.e., insurers may take into account age (3:1 rating band), tobacco use and geographic area in charging premiums.
Given President Trump’s statement after the election that he supports the existing ACA ban on pre-existing condition exclusions it’s unlikely that Congress will approve a change in future legislation. Lawmakers understand that this prohibition is the most popular single provision in the 2010 law.
The first 100 days of the Trump Administration end on April 29. Ceridian’s webcast and Q/A underscore that developments on the Affordable Care Act, FLSA overtime rule, priority state initiatives and other major compliance issues will echo into the second, third and fourth 100 days and well beyond.
Contrary to political rhetoric about simple solutions, these policy issues are incredibly complex and deeply controversial—there are no shortcuts.
HR, payroll, benefits and compensation professionals understand these complexities and are learning that the Trump era compliance curve will be disruptive and discontinuous. They also know that staying ahead of that curve will demand their full attention—to federal as well as state action, as Ceridian’s Jill Barber will explain in Part 2.
Listen to the full recording of this special webcast: President Trump’s First 100 Days: Staying Ahead of the 2017 Compliance Curve.
With more than 30 years of experience in federal legislative and regulatory affairs, Jim O’Connell focuses on HR and PAYROLL POLICY ISSUES, keeping customers informed about fast-changing and complex compliance regulations and workforce trends. Follow him on Twitter JOCWashDCView Collection