Some of the headlines on the Affordable Care Act (ACA) throughout the last year may have led business owners to believe that the law was dead. The truth, however, is that courts are attempting to revive the patient. The back and forth may leave many employers wondering exactly what is happening. Is the ACA dead or alive? And what does this mean for the businesses caught in the crosshairs?
This post attempts to unravel the ACA mystery by summarizing recent court rulings and providing some practical advice.
Country music legend George Strait once crooned: “Texas is the place I’d dearly love to be.” Opponents of the ACA would probably agree with this sentiment. At the end of 2018, the stage was set and the venue was perfect for a Texas federal district court judge to deliver a 55-page opinion in response to a lawsuit brought by several Republican governors.
For those not inclined to slog through the details, here’s a quick summary of the opinion: The ACA is invalid. Not part of it . . . all of it. Completely invalid.
And the reason the ACA was ruled invalid is because the 2017 repeal of the individual mandate and its related penalty, which was effective beginning January 1, 2019, resulted in the repeal of the ACA’s constitutional underpinnings. The judge opined that the repealed individual mandate cannot be “severed” from the rest of the ACA and that the whole thing is unconstitutional.
What this ruling means as a practical matter will be addressed below but, first, it’s important to understand what happened in California and Pennsylvania.
In January, judges weighed in on one of the Trump administration’s attempts to erode the ACA. Under the ACA’s contraceptive mandate, health plans are required to offer birth control. While some moral and religious exemptions had been enacted previously, the current administration proposed new regulations greatly expanding the ability to opt-out of the contraceptive mandate. The final, less-restrictive exceptions were set to take effect on January 14.
In December, the United States Court of Appeals for the Ninth Circuit, located in California, issued an injunction against enforcing the new rules. That injunction was limited only to the handful of states that had formally brought the request. However, on January 14, a federal district judge in Pennsylvania issued a nationwide injunction against implementation of the new rules.
As a result, the proposed expanded rules are, at best, on hold. The current limited exceptions to the mandate are still in force.
So what do all these ACA fluctuations mean for businesses and their employees? Here are some things we know right now that can help employers prepare for the ACA road ahead:
• The ACA is a long way from over. The current ACA rules remain in effect until the appeals process is exhausted—and that could take a while. A repeal of the ACA or, at the very least, restrictions on it, remains a key priority for the current administration. For employers, this means that the ACA will continue to bring changes and confusion they’ll need to navigate.
• The ACA is still viable, for now. While some employers may have thought that they could cross the ACA off of their list of things to plan for as a result of the Texas ruling, that isn’t the case. Businesses still need to be prepared to be in compliance with ACA regulations, making sure that, among other things, they:
• It may be a good time for companies to revisit their ACA plan design. Businesses whose 2019 plan design was relying on the expanded contraceptive mandate rules may want to revert back to the current, more restrictive rules. This may require some adjustment in coverages and updates to relevant plan documents.
• Professional ACA support is key. The shifting ACA seas require expert navigation. It is advisable to consult with a trusted HR advisor with experience guiding small and medium size businesses through the ACA
This communication is for informational purposes only; it is not legal, tax or accounting advice; and is not an offer to sell, buy or procure insurance.
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