Employee Benefits Likely Impacted by Executive Orders
During the first weeks of the second Trump Administration, a number of executive orders and other actions have been implemented, with some having potential implications for employee benefits. Executive Orders can, and do, influence existing rules and often indicate further actions. The following discussion looks at three executive actions with employee benefits implications.
The Regulatory Freeze
On January 20, 2025, the new administration issued a regulatory freeze memorandum pausing the issuance of any new rules, withdrawing any rules not yet published, and postponing, if possible, the effective date of any final rules. The proposed HIPAA Security Rule revisions and the proposed Medicare Part D updated simplified creditable coverage determination for 2026 are subject to this regulatory freeze. The proposed changes to the simplified creditable determination under Medicare Part D are likely to have an immediate impact as they would affect the plan design for prescription drug programs for calendar year 2026 and beyond. The proposed guidance would increase the coverage prescription drug plans are required to provide to be considered “creditable” coverage for Part D purposes under the simplified determination method. Further, the proposed changes would eliminate the rules around integrated plans and require prescription drug plans to satisfy three requirements to be deemed creditable prescription drug plans under Part D.
Under the simplified method, creditable prescription drug plans for 2026 would be plans that: (1) provide reasonable coverage for brand drugs, prescription drugs, and biological products, (2) provide reasonable access to retail pharmacies, and (3) are designed to pay on average 72% of a participant’s prescription drug expenses (compared to 60% in 2025).
The proposed guidance directs that plans can rely on the actuarial determination to assess if their prescription drug plan is creditable coverage under Part D. Plans filing for the retiree drug subsidy (RDS) would not be allowed to use the simplified determination and would be required to limit members out-of-pocket expenses to $2,000 ($2,100 for 2026).
Whether the proposed changes to the simplified creditable determination will be implemented under the Trump Administration, or if they will be subject to change, is uncertain now. Therefore, employers should use caution when finalizing their 2026 prescription plan design. Keep in mind the current CMS concession to allow employers to use the existing simplified determination rules expires at the end of 2025.
The HIPAA Security Rules and Medicare Part D determination rules will be subject to further review by Trump Administration officials to determine if changes are required or recommended. Employers will be best served by not making any changes pending the outcomes of this review. Employers should follow any news on the Part D guidance because decisions on 2026 plan designs may need to be made in a short time frame.
The Deregulatory Order
President Trump signed Executive Order (EO) 14192 directing agencies to eliminate 10 pieces of guidance for every regulation that is issued. During the first Trump Administration, the regulatory reduction goal was a modest 2-for-1. The intended goal of the deregulatory order is to limit the cost burden on the regulated communities, including employers. The EO includes a cap on the total cost that agencies can impose through new regulation. At this point, trying to predict which regulations or other guidance might be eliminated requires a very large crystal ball.
The Gender Identity Executive Orders
The Trump Administration has issued two Executive Orders related to gender identity (EO 14168 and EO 14187). EO 14187 has already been challenged and remains pending in court at this time, so the impact of that EO remains unclear.
In a related matter, the Supreme Court will likely render a final determination by June 2025, on United States v. Skrmetti, a case that challenges a state’s right to ban gender affirming care for underage children. The Trump Administration has notified the Court of its support of this Tennessee law which provides that restrictions imposed on gender affirming care on minors do not violate the Equal Protection Clause of the Constitution.
These EOs and recent support of state laws like those in Skrmetti indicate a shift in focus and enforcement concerning gender identity laws. Treatment to facilitate gender transitions, at least for minors, is unlikely to be a focus under Section 1557 of the Affordable Care Act during this administration. With this changing political and social landscape, employers should pay attention to future pieces of guidance and litigation in this area before making substantial changes to their health plans.
What’s Next
While these and other early actions by the second Trump Administration are implementing a different regulatory approach, the administration is still in its early days. Obviously, the effect on employee benefit plans and employers will only be known as changes are implemented and rules are issued. Our firm will continue to monitor any changes to employee benefits laws resulting from these executive orders and actions and will provide guidance to employers in response to those changes.
Woods Rogers attorneys are here to help you monitor and understand the rapid changes coming from the new presidential administration. If you have questions about changes to employee benefit plans, please contact the author of this alert, your Woods Rogers attorney, or any member of the Employee Benefits & Compensation team.
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