3 Things Employers Need to Know About Texas Court ACA Ruling

Updated February 27, 2019: Since U.S. District Judge Reed O’Connor’s ruling that the ACA in its entirety was unconditional in mid-December of 2018, more activity has taken place around the Affordable Care Act (ACA).

Democratic States and the House of Representatives have made healthcare a priority for 2019 and beyond
Ahead of Judge O’Conner’s ruling, Maryland’s Democratic attorney general sought to protect the ACA by filing a separate lawsuit to uphold the law. Federal Judge Ellen L. Hollander dismissed the lawsuit stating that the state’s attorney general had not provided enough evidence to prove the administration was failing to enforce the 2010 ACA healthcare law. Hollander stated that she would allow Maryland to revive the suit if evidence materialized later on.

Healthcare was stated as the number one issue for voters during mid-term elections and helped the Democrats secure 218 of the open House of Representatives seats. Democratic candidates kept healthcare center stage in many of their campaign races. Even Nancy Pelosi’s first speech as the House Speaker promised to protect Americans with preexisting conditions. This promise was later reinforced when the House voted 235 to 192 to approve the right to intervene in Judge O’Connor’s ruling and defend the ACA.

On February 14, the 5th Circuit Court of Appeals granted the House the right to intervene in Judge O’Connor’s case. The court will review O’Connor’s ruling that the entire healthcare law is invalid after Congress eliminated the penalty for not having health insurance.

Judge Leslie Southwick, of the 5th Circuit Court of Appeals, also approved requests from four states to join the House of Representatives in their fight to appeal O’Connor’s ruling including: Colorado, Iowa, Michigan and Nevada. However, she denied the request filed by the states’ to fast track the appeal. The states asked to hold oral arguments in July of 2019, but the court did not indicate when arguments would be scheduled.

To read more about the state of the ACA in 2019 and beyond, click here.

Original Blog from December 17, 2018
After several quiet weeks, the Affordable Care Act (ACA) came back into the limelight this weekend following a ruling by a Federal judge in a Texas court that the entire Affordable Care Act is unconstitutional. It’s important for employers to know that this ruling will likely be appealed to the Supreme Court and does not actually go into effect or change the law or employer requirements at this time.

At the center of the Texas case is the Supreme Court’s decision in 2012 that the ACA was constitutional because of Congress’s ability to tax. Because the Individual Mandate penalty was reduced to $0 with the passing of the new tax bill in December 2017, a group of states argued that the entire law should be thrown out. Last Friday, U.S. District Judge Reed O’Connor in Texas sided with the states, ruling that the law in its entirety is unconstitutional.

Most experts across political parties indicate the Texas ruling will be reversed in appeal as it violates established legal standard. They say that because Congress intended for the rest of the ACA to remain in place when it repealed the Individual Mandate penalty, the rest of the law remains valid. Therefore, the expectation is the decision will be overruled. For more details on the ruling and expected appeal, read the post by The Hill on the five takeaways from the court decision.

Here’s 3 things about the Ruling that Employers Need to Know

1) There is no change to the law, and the Trump Administration has stated the law is in full effect. A statement from White House Press Secretary, Sarah Sanders, indicated “We expect this ruling will be appealed to the Supreme Court. Pending the appeal process, the law remains in place.” ACA reporting requirements remain and penalties are unchanged.

2) Experts expect the Texas ruling to be overturned. The ruling will be appealed, ultimately to the Supreme Court if it gets that far. The appeals process may take years to complete. The Supreme Court has consistently upheld the constitutionality of the ACA twice in previous court challenges, and experts (including those who are both for and against the law) widely expect the Court to do the same in this case.

3) Despite the ruling, the ACA is actually becoming more entrenched in the fabric of the United States. More states are choosing to expand Medicaid, some are creating their own individual mandates, and employer mandate penalties are being enforced by the IRS. Any change to the law that would take away affordable healthcare coverage from those who currently receive it could be a major political challenge for the governing party. At the same time, with the Democrats leading the House of Representatives, the threat of legislative repeal has been mitigated for the next two years.

For applicable large employers across the United States who are preparing for 2018 Forms 1095 and 1094 reporting, the Texas ruling has no immediate impact. The Employer Mandate is in full effect and the IRS continues to assess potential penalties for non-compliance. We’ll keep our current clients informed of any changes of substance.

If you would like to know more about Health e(fx) and how we’ve grown to be the largest ACA software provider serving 17.6 million, contact us today.

December 17, 2018

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