Unpacking Recent Executive Orders: What’s Happened, Expected Legal Challenges, and Potential Effects on Benefit Plan Sponsors

In the ever-evolving landscape of healthcare and employment law, executive orders play a pivotal role in shaping policies that directly impact employer-sponsored benefits.

The second Trump administration has issued a series of executive orders that bring significant changes to this area, affecting compliance requirements, funding allocations, and regulatory frameworks.

What Are Executive Orders?

Executive orders have been used by presidents as far back as George Washington. An executive order (EO) is a directive issued unilaterally by the President of the United States that has the force of law. EOs do not create new laws but can interpret, implement, or direct the enforcement of existing laws. Any president is permitted to amend, repeal or replace any previous executive order.

What Executive Orders Can Do:

✔ Direct federal agencies on how to enforce laws or regulations
✔ Establish policies for federal contractors and agencies
✔ Influence areas like immigration, healthcare, and employment through regulatory changes

What Executive Orders Cannot Do:

✘ Create new laws without Congressional approval
✘ Directly override laws passed by Congress
✘ Bind private employers unless tied to federal contracts or regulations

Once a president signs an EO, it can take effect immediately or not for months, depending on whether it requires formal action from a federal agency. EOs may face legal challenges, reversals by future administrations, or limitations if they contradict existing laws. Employers should monitor implementation, agency guidance, and court rulings to stay compliant.

Compliance Requirements under the Affordable Care Act (ACA)

The Trump administration issued an EO addressing the meaning of sex, gender identity, and related terms that will affect compliance requirements under several employee benefit provisions, including the nondiscrimination requirements of Section 1557 of the ACA and the ACA’s preventive health services rule.

Prohibition of Funding for Gender-Affirming Care

The Trump administration issued an EO that included measures to restrict federal funding for gender-affirming care, impacting employer-sponsored health plans that cover such services. The order will impact employee benefit provisions that include ACA Section 1557, the ACA’s requirement for essential health benefits (EHBs) and the federal government’s TRICARE health program. This order has since been challenged in federal court under ACA Section 1557.

Regulatory Freeze Order

The Trump administration issued a regulatory freeze order which will likely affect whether proposed regulations issued at the end of the Biden administration are finalized. Early this year, under the Biden Administration, the Department of Health and Human Services (HHS) issued proposed regulations that would significantly update and expand the existing HIPAA Security Rule. There is a question as to how the Trump administration will handle these proposed regulations going forward.

10:1 Deregulation Order

The Trump administration issued an EO requiring federal agencies, such as the Department of Labor (DOL), upon issuing a new rule, regulation, or guidance, to identify at least ten existing rules, regulations, or pieces of guidance to be repealed. Employer-sponsored benefit plans are highly regulated by the agencies through various complex rules, such as those in the mental health parity space. This order mandates that for every new regulation introduced, ten existing regulations must be eliminated, potentially impacting the regulatory landscape for employee benefits.

Reproductive Health Care Access

Following the Supreme Court's 2022 decision on abortion rights, the Trump administration’s stance could influence employer health plans and coverage for reproductive health services. The Trump administration issued an EO revoking Biden administrative orders to expand access to reproductive health care.

ACA Subsidies and Prescription Drug Costs

The Trump administration issued an EO that includes revocation of several Biden administration orders including enhanced ACA enrollment subsidies that are set to expire at the end of 2025 and eliminating previous efforts to lower Medicare and Medicaid prescription drug costs.

This is a rapidly evolving policy area, and it is crucial for employers to stay informed and proactive. Employers should consult with professionals to navigate the complexities of these changes and to develop strategies for compliance and risk mitigation.

For more analysis on how the new administration is impacting benefit plan sponsors, check out our Need-to-Know Quarterly Recap for Employers [February 2025 Update] webinar event.