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Affordable Care Act – Challenges and Changes Continue

Since the Affordable Care Act (ACA) was signed into law by President Barack Obama it has become embedded in our nation’s health care system. Efforts to repeal the law have been unsuccessful and for now, the law remains intact. This Update provides a summary of a few recent developments under the ACA.

  • Cadillac Tax Repeal Supported in the House. The House of Representatives recently voted in support of a bill that would permanently repeal the “Cadillac tax,” originally enacted as part of the ACA. The bill will next be considered by the Senate, and if passed in the Senate the legislation will be presented to President Trump for signature. Originally set to take effect in January 2018, the tax has been twice delayed, and now applies to the cost of employer-sponsored health coverage in excess of certain thresholds starting in 2022. A full repeal is needed to prevent additional cost-shifting onto employees or the cancellation of group coverage altogether.

  • ACA Ruled Invalid by Federal Court. The Supreme Court could soon wrestle with an ACA case that puts the law’s fate at stake. In December 2018, a federal court ruled that the entire ACA is invalid due to the elimination of the individual mandate penalty as of January 1, 2019. In response to the federal court ruling, the U.S. Department of Justice (DOJ) filed a March 2019 letter supporting the court’s ruling. This means that the DOJ also believes the ACA to be unconstitutional, and agrees that it should be invalidated in its entirety. An appeal of that federal court ruling was heard by the 5th U.S. Circuit Court of Appeals on July 9.

    • ACA Remains in Place Pending Appeal Decision. The circuit court could now take months to decide the appeal of the federal court decision, but the Trump administration has said it will continue to enforce the many provisions of the law until a final ruling is issued.

    • Possible Outcomes. Analysts see three possible outcomes in the appeals case. The court could leave the law functioning as-is, or affirm the federal court ruling striking down the individual mandate and entire ACA as unconstitutional, or invalidate the mandate alone and sever it from the rest of the law, leaving much of the ACA in place. Regardless of the decision, it is anticipated that the US Supreme Court will likely take up this ACA case, but probably not until 2020. This sets the stage for a major ACA appeal decision later this summer that will lead to significant debate over the ACA during the 2020 campaign.

    • HHS Will Continue to Enforce ACA. The Department of Health and Human Services (HHS) has confirmed that it will continue administering and enforcing all aspects of the ACA as it has before the federal court issued its opinion.

  • Individual Mandate Repealed. Effective as of January 1, 2019, the ACA individual mandate penalty was eliminated which means individuals are no longer subject to a penalty under the ACA for failing to obtain acceptable health insurance coverage. The ACA employer mandate, including the shared responsibility (pay or play) penalties and related reporting requirements was not repealed. In response to the repeal of the federal individual mandate, several states, including New Jersey, have adopted individual health insurance mandates and several other states are considering their own individual health insurance mandates. As more states adopt mandates, employers operating in multiple states should monitor their obligations in the various jurisdictions where their employees reside and expect more complex reporting obligations related to the state mandates.

  • Alternative Solutions Considered. In the midst of the continued battle to change or eliminate the ACA, some lawmakers are considering solutions they believe are long overdue: Such as a single-payer or Medicare-for-all system.

So as it stands for now, the ACA requirements continue, including the 2019 Exchange enrollment, the ACA’s employer shared responsibility (pay or play) penalties and related reporting requirements, and all other applicable ACA requirements. But we are hopeful that a repeal of the Cadillac tax may actually happen in the short term based on the bi-partisan support for its elimination. We’re watching the Cadillac tax legislation and the ACA court appeal decision and we will continue to share important updates as warranted. Please contact your Conner Strong & Buckelew account representative toll free at 1-877-861-3220 with any questions.

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