Regardless of your political leanings, this year’s election was monumental. With Republican control of the executive branch and both houses (51 Senate seats and 236 seats in the House of Representatives), the President-Elect will have more power to alter existing and enact new legislation than in the preceding six years.
After this surprising result in the presidential race, the question for employers is:
Just what will a President Trump mean for the employee benefits that are so important for non-profits to maintaining a competitive cost structure while using available funds to attract, engage and retain the talent needed to drive results?
While it’s too early to tell what policy priorities the new administration will have, here are a few early thoughts:
- Tax reform is expected in the first year of the presidency. With the proposed tax cuts on the wealthy, the value of charitable deductions could be reduced. “Write offs” are scheduled to be capped at $100,000 for single and $200,000 for married couples.
- There is a proposed annual reduction of 1% in federal spending, which could put more pressure on non-profits to provide social services.
- While Mr. Trump has regularly discussed a full repeal and replacement of PPACA, he faces some challenges in making that occur. Republicans in Congress, many of whom are facing re-election in 2018, would most likely be unwilling to repeal PPACA without some type of replacement. Repeal could mean more than 20 million individuals (many of them as a result of Medicaid expansion) would lose their health insurance coverage
Many believe the replacement plan will be focused on the House Republicans Plan
- ACA’s unpopular Cadillac tax — a 40% excise tax on employer plans exceeding $10,200 in premiums per year for individuals and $27,500 for families — will be one of the first targets. Trump and Clinton agreed on one thing: killing the tax.
- Started during the Bush administration, HSAs have become even more popular with employers in recent years, Trump has promoted new rules that are likely to significantly increase their popularity by employers. These rules include tax-free contributions, HSAs that become part of the estate and can be easily transferred to family members.
- While the House Republican plan would eliminate both the Employer Mandate as well as the Individual Mandate, it would retain certain popular patient protection provisions of PPACA. For instance, the plan would allow young adults to stay on their parents’ health plan to age 26, ban insurers from charging people with pre-existing health problems higher premiums, and forbid insurers from dropping coverage if a policyholder gets sick.
- It is unclear whether a Trump administration — led by an admittedly pro-business real estate mogul — would make life easier for mega-mergers. Early indications are, Aetna’s stock price went up $14 in the days after the election, because traders believe the Department of Justice under President Trump will be less likely to prevent his company’s proposed merger with Humana.
- While pharmacy benefits have been a main driver of increased healthcare costs for all employer plans, there is early indication from the stock market that this may continue. Trump has pushed the idea of faster approval of medicines and devices, meaning this may be one of Trump’s health-plan goals to gain support from both sides of the aisle. The drug industry, which had been preparing to defend its business model and pricing under a possible Hillary Clinton presidency, may now see an opportunity instead to streamline the drug-approval process.
- Employers also can expect Trump to focus on parental leave and childcare. He promises “six weeks of paid maternity leave to any mother with a newborn child whose employer does not provide the benefit.”
There will be lots of big decisions between now and January 20th, 2017. We can expect a close examination of employer sponsored benefits as these tax-free benefits are scrutinized. And as the election has shown, you should design and develop strategies but do not be surprised if you need to quickly adjust, for success in the short and long term.
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