With an administration change upon us, there is potential for impact and change to the employee benefits industry. As of the date of this article, details regarding President-elect Donald Trump’s healthcare policies have not been shared; similarly, healthcare policy was not at the forefront of either candidate’s election campaign. With little known regarding potential healthcare policy change, this article discusses considerations (not exhaustive) for employer plan sponsors on how a second term for President Trump could impact employer health plans.
Affordable Care Act (ACA) and Alternative Options to Group Health Plans. With little commentary regarding the future of the ACA, it seems unlikely a full repeal and replacement will develop (although not entirely ruled out). While not directly related to group health plan coverage, it is worth noting that enhanced subsidies for the marketplace exchange under the Biden administration are set to expire at the end of 2025 and the Trump administration seems to support allowing the subsides to expire. These subsidies, which both increase the amount of financial assistance for those already eligible for assistance and also expands subsidies available to middle-income people, have led to significantly increased enrollment in the marketplace exchange. This could, in turn, have an impact on group health plan enrollment and cost-shifting to the group market.
Additionally, non-ACA coverage options, such as association health plans and short-term, limited-duration insurance (STLDI), may be reprised during Trump’s second term, as they were implemented in his first term. Similarly, there could be further commitment to Individual Coverage Health Reimbursement Arrangements (ICHRAs); however, marketplace exchanges are needed to support ICHRA growth (which may be impacted if the subsidies expire).
Reproductive Healthcare. Without further information or action, we cannot anticipate with certainty what, if any, impact to reproductive healthcare (gender affirming care or family planning) may be. From the campaign actions, it seems the Trump administration will continue to support reproductive healthcare access to be determined on a state-by-state basis. That said, our prior article may be helpful, One Year Later: Status of Reproductive Healthcare Coverage Since Dobbs v. Jackson.
Pharmacy Drug Pricing. It is not clear what the Trump administration’s agenda may be during his second term regarding drug pricing. However, actions taken during his first term (where his administration focused on drug costs and price transparency) suggest that drug pricing will continue to be a focal point, including Pharmacy Benefit Manager (PBM) reform.
Tax Policy. Anticipated in 2025, Congress will debate tax policy. Of note, legislation could include a proposal from House Republicans to limit the employee tax exclusion (i.e., pre-tax benefits) for employer-provided healthcare, but currently uncapped. This tax exclusion reduces employees’ after-tax cost of health coverage (i.e., increasing take-home pay). Meaning, a limitation could lead to an increase in the cost of health insurance for employees. It is not clear if the Trump administration supports a potential tax exclusion cap, which is something to keep a watchful eye.
Dynamics to Watch & Employer Takeaways
A few recent nominations, including Robert F. Kennedy Jr. (RFK Jr.) as Secretary of the Department of Health and Human Services (HHS) and Mehmet Oz (also known as Dr. Oz) to oversee the Centers for Medicare and Medicaid Services, have the industry wondering how their leadership may impact health benefits. With a Republican president and a Republican majority in both the House and Senate, we are likely to see legislative change, perhaps more than in recent administrations, during the next four years. Importantly, Sequoia will continue to monitor and communicate industry updates, as appropriate – stay tuned for more.
Connect with a Sequoia consultant to learn how Sequoia’s compliance services are integrated in our benefits services and tailored solutions. And if you’re already a Sequoia client, stay on top of your employer obligations with your Compliance Checklist that highlights important compliance dates, action items, and resources.
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