Question: What are the potential legislative and regulatory changes related to employee benefits that the incoming administration may pursue?

Short Answer: Unlike in the first Trump term, an effort to fully repeal and replace the ACA seems unlikely in the second stint. However, the new administration may still seek to make significant changes such as eliminating the ACA employer mandate penalties, streamlining ACA reporting, expanding HSAs, and codifying the ICHRA rules into statute.

Background: ACA Repeal/Replace…Won’t Get Fooled Again

The first Trump administration came in with high hopes of repealing and replacing the ACA. After the brutal legislative struggle that resulted in a politically damaging defeat, it is unlikely that the incoming administration will make the same mistake twice. Furthermore, many of the most controversial ACA provisions have already been repealed at this point (e.g., CLASS Act, Cadillac tax, IPAB, individual mandate penalties), rendering the ACA as less of a hot-button political issue at this stage.

The very brief history of the 2017 repeal/replace efforts involved the Republican House majority passing the American Health Care Act (AHCA) in May, the Senate attempting to rework the bill via a renamed Better Care Reconciliation Act (BCRA) through the summer but having Sen. McCain dramatically vote against the bill at the end of July to fail 49-51, and the Senate later making a last-ditch effort to revive the repeal/replace legislation through a bill referred to as Graham-Cassidy—which also failed at the end of September. After giving up on the ACA repeal/replace push, Congress turned to the Tax Cuts and Jobs Act (TCJA) instead, which was passed and enacted by the end of the tumultuous first year of the administration.

Many of us in the industry spent considerable time and effort closely following these ACA repeal/replace efforts in 2017. After that experience, it is safe to say that those of us who have been through the prior attempts will now take a much more skeptical wait-and-see approach if there is any purported effort to restart the process.

Possible New Administration EB-Related Priorities

Even though ACA repeal/replace efforts appear not likely to be revived (or even plausible) at this point, there are still significant potential changes that the incoming administration may seek to impose on the employee benefits landscape—both deriving from the first campaign and new issues that have developed since.

The First Trump Campaign Materials
Health insurance was more at the forefront in the 2016 campaign, and at that time the Trump campaign’s materials promoted the following policy positions as part of the intended ACA repeal/replace package:

• Permit sale of health insurance across state lines

• Permit individuals to fully deduct health premium expenses

• Expand the use and benefit of HSAs

Furthermore, there were proposals (primarily spearheaded by Ivanka Trump at the time) to offer new childcare options through the tax code such as:

• Permit working parents to deduct daycare expenses for children and elderly dependents

• Create a dependent care savings account (DCSA) modelled after HSAs to pay for daycare

Overview of Changes Proposed in the ACA Repeal/Replace Efforts
The content of the ACHA, BCRA, and Graham-Cassidy efforts writ large can be summarized as ultimately attempting to make the following primary changes that would have affected employee benefits:

• Eliminate the ACA employer mandate provisions (technically zero out the penalties, but to same effect)

• Double the HSA contribution limits and allow tax-free distributions for premiums

• ACA reporting eliminated or moved to simple box on Form W-2 reporting months of coverage

• Elimination of the ACA cap on health FSA salary reduction contributions

• Focus on state block grant approach with more flexibility to states to implement health care reform measures than standard ACA approach

What About the Incoming Administration?
The Trump campaign materials this time around had only threadbare information surrounding healthcare and employee benefits policy positions. President Trump was also noncommittal on his intentions during his debate with Vice President Harris, stating only that he had “concepts of a plan” to address the ACA.

Nonetheless, it seems likely that the incoming administration will make at least some effort to achieve many of the prior goals listed above. What about new items? One may be codifying ICHRAs into statute. Republicans previously made an attempt to do this through the CHOICE Arrangement Act, which failed after President Biden issued a Statement of Administrative Policy in 2023 strongly opposing the effort. Moving ICHRAs from a regulatory to statutory scheme (and likely with a few improvements in the process) would go a long way toward providing stability in the area and comfort for employers that are still cautious about considering the option.

At a minimum, the new administration will likely seek to finalize the ICHRA regulations addressing ACA affordability that the Biden administration withdrew immediately upon taking office.

• For more details: Newfront ICHRA for Employers Guide

It is also possible that the incoming administration will attempt to revive the ill-fated Association Health Plan (AHP) rules that were doomed to a dire fate when the courts initially struck it down, and then were subsequently rescinded by the Biden Administration. AHPs were intended primarily to make it easier for small employers and the self-employed to join together in health coverage to achieve better underwriting outcomes.

What Does This All Mean for Employers?
Everything remains status quo unless and until any of the potential policy goals discussed are actually enacted/promulgated/implemented. Nonetheless, employers should have an eye on the horizon for possible future action items tied to any of those changes potentially taking effect:

• Possible ability to move group health plan full-time eligible status up to 40 hours/week and or base eligibility on regularly scheduled hours (both common in the pre-ACA employer mandate era)

• Possible ability to discontinue offering a group health plan and instead move to an ICHRA (available since 2020, but likely to have more favorable legal landscape going forward)

• Possible ability to offer a large opt-out credit or group health plan alternative funding that is deposited into employee HSA accounts upon proof of HDHP enrollment on individual market (would be viable without an employer mandate and with the expansion of HSAs to higher limits and use for premiums)

• Possible ability to discontinue service with ACA reporting vendor (made possible by elimination of reporting rules or simplified W-2 alternative previously proposed)

• Possible ability to shop for insurance policies across state lines (potentially avoiding more costly insurance mandates in employer’s primary place of business)

• Possible ability to enter into association health plans with unrelated employers to create a larger experience pool and achieve lower costs (including the ability of small employers to avoid the community rated small group market and instead achieve experience-rated underwriting)

• Possible ability to offer employees dependent care savings accounts (DCSAs) to save and invest for child and elder care expenses (with the same tripe-tax advantaged structure as HSAs)

Summary: Into the Unknown
On the one hand, we have been here before. We have seen what types of health policies a Trump administration favors, and therefore we have some sense of what to expect. However, that sense of predictability is probably misleading as we enter into 2025. For one, it is not clear what kind of legislative support the incoming administration will have to achieve any of those goals. For another, presidents tend to act differently when they are not seeking reelection, which could portend a different course from the first term.

More importantly, though, the types of issues that moved the needle in 2017 are very different from what the incoming administration is likely to prioritize in 2025. Health coverage is no longer at the forefront of everyone’s mind, and the bitter memories of the failures in that area last round are likely to be a significant deterrent to following any similar path. Nonetheless, even with the ACA out of the brightest spotlight, there are several potential unresolved policy priorities for the incoming administration discussed above that will likely receive at least some degree of attention and legislative/regulatory effort in 2025. Stay tuned for updates…

Disclaimer: The intent of this analysis is to provide the recipient with general information regarding the status of, and/or potential concerns related to, the recipient’s current employee benefits issues. This analysis does not necessarily fully address the recipient’s specific issue, and it should not be construed as, nor is it intended to provide, legal advice. Furthermore, this message does not establish an attorney-client relationship. Questions regarding specific issues should be addressed to the person(s) who provide legal advice to the recipient regarding employee benefits issues (e.g., the recipient’s general counsel or an attorney hired by the recipient who specializes in employee benefits law).