Saturday, January 28, 2017

Republican ACA Proposal Poses Challenges for Multistate Employers

Kate McGovern Tornone Wednesday - January 25, 2017

A group of republican senators proposed a replacement bill for the Affordable Care Act (ACA) that would allow states to choose whether or not to keep Obamacare’s provisions in place. Because employers’ requirements would depend on where employees work, compliance could be a real challenge for companies with operations in multiple states, according to the Society for Human Resource Management (SHRM).

The bill was seemingly an attempt to gain bipartisan support but lawmakers on both sides have expressed dissatisfaction with the provisions, said Chatrane Birbal, SHRM’s senior advisor for government relations.

Sen. Bill Cassidy (R-LA), the bill’s main sponsor, assured lawmakers that this is the best option while introducing the legislation on January 23. “It has been a Republican principle that power is best held by individuals and states, not the federal government,” and this is the best way to achieve President Trump’s goals of affordable access to coverage, including for those with pre-existing health conditions, Cassidy said.

The Senate minority leader, however, disagreed. The proposal would create chaos, not affordable health care, Sen. Chuck Schumer (D-NY) told lawmakers.

What it Does

The Patient Freedom Act of 2017 (S. 191) would afford states three options: (1) keep Obamacare; (2) adopt a new option for states that is spelled out in the bill; or (3) design their own, alternative solution.

Under “option 2” a state would participate in a new market-based system and receive funding equal to 95% of federal premium tax credits and cost-sharing subsidies, as well as the federal match for Medicaid expansion, according to a fact sheet accompanying the bill.

States could choose to receive funds in the form of per beneficiary grants or refundable tax credits. In either case, funds will be deposited in individuals’ “Roth health savings accounts (HSAs),” a new form of account that differs from a traditional HSA in that deposits are taxable.

For states that choose option 2, individuals can be automatically enrolled in default health coverage and Roth HSAs, with the right to opt out. That will keep premium prices down, Cassidy said.

Under this bill, employers’ responsibilities will be contingent on where their employees work. If an employer only has workers in “option 2” states, it will no longer have to offer health insurance to at least 95% of its full-time workforce or face a fine, or comply with the ACA’s reporting requirements. However, if it has employees in “option 1” states, the ACA requirements remain.

This could be problematic for multistate employers, especially for those with self-insured plans according to Birbal. Those plans are regulated by the Employee Retirement Income Security Act (ERISA) and are not subject to state insurance regulations; but this bill doesn’t seem to recognize ERISA preemption, she told BLR®.

ERISA has provided employers with a workable framework for employee benefits, allowing them to offer a uniform set of benefits to employees, Birbal said. “SHRM believes that the flexibility and certainty of the ERISA framework has been essential to the success of the employer-based system and should be maintained.”

The bill leaves intact other parts of the ACA in all states, such as market reforms like the ban on pre-existing condition exclusions and the requirement to cover dependent children through age 26.

Also remaining in place is employers’ responsibility to provide breaks and spaces for nursing mothers to express breast milk. The ACA amended the Fair Labor Standards Act to require such breaks and the proposed bill doesn’t undo that amendment.

Overall, this was a good first attempt by lawmakers to meet in the middle ground, Birbal said, “but I suspect … in the coming months, we’re going to see a number of bills that are going to be introduced.”

SHRM made several requests in a letter to Congress earlier this month, including a call to maintain the flexibility afforded by ERISA. Birbal said that letter still represents the organization’s priorities. (For more information on SHRM’s requests, see Trump Takes Aim at ACA on First Day in Office.)

As for the individual mandate, Cassidy said his bill will allow fans of Obamacare to stay with it. “Republicans think that if you like your insurance, you should keep it,” he said. “California and New York: you love Obamacare; you can keep it.”

But the Center for American Progress, a liberal think tank, said his statement was disingenuous. “If you happen to live in a state controlled by those who oppose Obamacare, they would be able to gut your coverage,” the organization’s vice president for health policy, Topher Spiro, said in a statement. “It’s unconscionable that access to quality health care would depend on where you happen to live.”

Sens. Susan Collins (R-ME), Shelley Moore Capito (R-WV), and Johnny Isakson (R-GA) also sponsored the bill. If passed, it would take effect January 1, 2018. Cassidy said that Rep. Pete Sessions (R-TX) is expected to introduce a companion bill in the House.

Kate McGovern Tornone is an editor at BLR. She has almost 10 years’ experience covering a variety of employment law topics and currently writes for HR Daily Advisor and Before coming to BLR, she served as editor of Thompson Information Services’ ADA and FLSA publications, co-authored the Guide to the ADA Amendments Act, and published several special reports. She graduated from The Catholic University of America in Washington, D.C., with a B.A. in media studies.

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