By: HUB’s EB Compliance Team

The initial weeks of the second Trump Administration have seen a flurry of executive orders and other actions, some of which could have benefits implications. While Executive Orders, in and of themselves, have little direct impact on most employers, they can have an effect on existing rules and do signal potential future actions.

Regulatory Freeze Memo

As is common in any transition, the new administration issued a regulatory freeze memo generally pausing any issuance of new rules, withdrawing any rules not yet published, and postponing, where possible, the effective date of any final rules. The two most immediate effects are on the proposed HIPAA Security Rule revisions and the proposed Medicare Part D updated simplified creditable coverage determination for 2026.

While both are potentially significant, the proposed changes to the simplified creditable determination under Medicare Part D would likely be more immediate since they would affect the plan design prescription drug programs should follow for calendar year 2026 and beyond (for background on the changes to Medicare Part D go here). The proposed guidance would significantly increase the coverage prescription drug plans are required to provide to be considered “creditable” coverage for Part D purposes under the simplified determination method.

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. Specifically, 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 also provides 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).

It is uncertain if the proposed changes to the simplified creditable determination will prevail under the Trump Administration, or if they will be subject to change. Therefore, employers should exert caution when finalizing their 2026 prescription plan design. The current CMS concession to allow employers to use the existing simplified determination rules expires at the end of 2025.

As noted above, the HIPAA Security Rules and Medicare Part D determination rules will be subject to additional review by Trump Administration officials to determine if changes are required or recommended. As a result, employers would be best served to sit tight and not make any changes pending the outcomes of this review. However, they should pay attention to news on the Part D guidance since decisions on 2026 plan designs may need to be made quickly following its release.

Gender Identity Executive Orders and Section 1557

The Trump Administration has issued two Executive Orders (“EOs”) related to gender identity (EO 14168 and EO 14187). EO 14187 has already been challenged in court, so the fate of that EO remains to be seen.

Relatedly, the Supreme Court will render a final determination by no later than June 2025, on United States v. Skrmetti that challenges a state’s right to ban gender affirming care for underage children. The Trump Administration notified the Court of their support of this Tennessee law stating that restrictions imposed on gender affirming care on minors do not violate the Equal Protection Clause of the Constitution in the Administration’s view.

The issuance of these EOs and recent support of state laws like those in Skrmetti signals a likely shift in focus and enforcement. Specifically, treatment to facilitate gender transitions, at least for minors, will likely not be a focus under Section 1557 of the Affordable Care Act during this Administration. Given that this is in flux, employers should pay attention to future pieces of guidance and litigation in this area before making broad-sweeping changes to their plans.

10-to-1 Deregulatory Order

In addition, the President signed EO 14192 directing agencies to eliminate 10 pieces of guidance for every regulation that is issued. The first Trump Administration had a more modest 2-for-1 reduction goal. The goal of the deregulatory order is to limit the cost burden on the various regulated communities, including employers. The order also imposes a cap on the total cost that agencies can impose through new regulation.

If experience with the 2-to-1 order is any guide, subregulatory guidance is included in counting the “10.” Therefore, while some regulations may get repealed, an effort to get to 10 will likely require the elimination of additional subregulatory documents (like notices, memos, guidance documents, etc.). Otherwise, regulatory activity will grind to a halt. Regardless, if the first Trump Administration is any guide, expect to see a slower regulatory pace over the next four years. At this point, it is far too speculative to predict which regulations or other guidance might be eliminated.

Takeaways

While these and other early actions by the second Trump Administration signal a different regulatory tone and approach, it is still early days. The effect on plans and employers will only be known as changes are implemented and rules are issued. Employers should keep an eye on this Compliance Directory and the HUB In Compliance newsletter for any changes and an analysis of actions employers need to take in response.

If you have any questions, please contact your HUB Advisor.

NOTICE OF DISCLAIMER
Neither Hub International Limited nor any of its affiliated companies is a law or accounting firm, and therefore they cannot provide legal or tax advice. The information herein is provided for general information only, and is not intended to constitute legal or tax advice as to an organization’s or individual's specific circumstances. It is based on Hub International's understanding of the law as it exists on the date of this publication. Subsequent developments may result in this information becoming outdated or incorrect and Hub International does not have an obligation to update this information. You should consult an attorney, accountant, or other legal or tax professional regarding the application of the general information provided here to your organization’s specific situation in light of your or your organization’s particular needs.