The American Benefits Council has asked the administration to think about the small employers when it takes steps, such as ending Affordable Care Act cost-sharing reduction subsidy payments in the middle of the year, that might hurt the individual market.
Trump administration officials announced last Thursday that they would end the cost-sharing reduction subsidy program payment stream immediately, because they do not believe the administration has a valid congressional appropriation it can use to justify making the payments.
Earlier in the day, President Donald Trump asked his cabinet secretaries to develop proposals for three possible changes to the health insurance market. One of the changes suggested involved employer-sponsored health reimbursement arrangements, or HRAs. Backers of the HRA proposal want employers to be able to use HRAs to give workers cash the workers can use to buy their own individual major medical coverage. Some groups see promoting employer-paid individual health coverage programs as a way to help employers back away from their current role as health coverage providers.
Hurting individual major medical market, and the Affordable Care Act public health insurance exchange system, “would make individual market coverage a less viable option for part-time workers, early retirees, and those who would otherwise elect to secure coverage through the individual market,” James Klein, president of the American Benefits Council, said in a statement.
Ending cost-sharing reduction subsidy payments could be a step back for efforts to increase the flexibility of HRA-based programs, Klein said.
Destabilizing the individual health market could also lead hospitals and physicians to shift the cost of caring for newly uninsured people onto the shoulders of employer-sponsored group health plans, he said.
The cost-sharing reduction subsidy program helps low-income exchange plan users pay their health plan deductibles and other out-of-pocket health care costs.
An HRA is an employer-owned account that can help an employee pay for health-care costs, such as bills for deductibles, co-payments and eyeglasses.
One major difference between an HRA and a health savings account is that an employee can use an HRA together with an ordinary low-deductible major medical coverage, or major medical coverage with a very high deductible.
An HSA user must combine the HSA with major medical coverage with a deductible higher than the statutory minimum threshold, and a deductible at or under a statutory maximum annual out-of-pocket spending limit. For 2017, the minimum individual HSA deductible is $1,300 and the maximum is $6,550.