King vs. Burwell – Nothing Changes

As most are aware, the U.S. Supreme Court issued its King vs. Burwell ruling on Thursday, June 25.

The court ruled 6 to 3 in favor of the White House, essentially keeping the Affordable Care Act (ACA) in place. They ruled that five contested words in the ACA (“exchange established by the state”) are not and were not intended to be interpreted that citizens of the 34 states that have not created exchanges are not eligible for federal tax credits or subsidies. Subsidies will remain available in all states with federally established or partnership exchanges, thereby maintaining the mandate under which employers may be subject to potential penalties with respect to the granting of subsidies or tax credits.

The commentary of the Supreme Court Justices on the ruling is a concise and strong rebuke of the plaintiffs. “Congress passed the Affordable Care Act to improve health insurance markets, not to destroy them,” Chief Justice John Roberts wrote. There is little room for further interpretation as to whether the ACA will remain or not – it is here to stay.

This decision, while politically charged, was expected by many. The ruling is also consistent with both the messages and information from the IRS indicating there will be no further delays, and annual reporting will proceed as scheduled for 2015, with the first 1094 and 1095 submissions due in 2016. The IRS has communicated a new reporting format, a testing schedule for both the 2014 voluntary year as well as the 2015 mandatory reporting year, and released 2015 draft forms. The regulations are set and reporting continues to move forward.

What does this mean for U.S. employers?
Employers that have been managing the ACA and the required reporting data know that the preparation for tracking and managing full-time eligibility determination is difficult. Add to this the required data aggregation, business policy decisions/changes, erroneous data cleanup, and meeting IRS-required reporting standards – and compliance is nothing less than daunting. Those employers that have not started or are just beginning the process must work quickly to fully prepare their 2015 data for reporting. It is almost July, month 7 of 12. Time is of the essence as the reporting deadline rapidly approaches.

Is there any chance that employers will get another “free” year to put their plans in motion?
This is not likely and is a very risky strategy to expect such. The law, for better and worse, has been in effect for five years. A major Supreme Court ruling in 2012, 50 attempts to repeal, and now a decisive Supreme Court ruling demonstrate that the law is just that – the law.

King vs. Burwell was likely the last major decision regarding the Affordable Care Act. Of course, there will continue to be lawsuits filed, and the 2016 general election will be filled with partisan discussion of repeal and “what if” scenarios. However, ignoring the inevitable may be a costly risk for any organization. ACA compliance is now critical to every organization. Data is key. If you do not have a plan, now is the time. 1094 B/C will need to be filed for this year. And 1095-B/C are due to employees/covered individuals by February 1, 2016.

Ensuring your data is ACA reporting ready must begin now to meet deadlines.

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