Update on November 11, 2020: Starting Tuesday, the United States Supreme Court began heard arguments on the latest challenge to the Affordable Care Act (ACA) law, one based on Congress’ elimination of the 2017 tax penalty intended to require individuals to buy health insurance. Challengers, led by Texas and backed by the Trump administration, contend that the mandate is unconstitutional without any tax to enforce it.
Despite last month’s Senate confirmation of Associate Justice Amy Coney Barrett, which gives conservatives a 6-3 majority, most court-watchers predict the challenge isn’t likely to dismiss the 10-year-old statute. Even if the justices are receptive, a majority of them are considered unlikely to strike down the entire law.
The earliest we expect a decision from the Supreme Court is early Spring, so employers will want to continue preparing for the 2020 reporting season and beyond.
But in the meantime, Joe Biden, President-elect and his administration pledged to double-down and invest in the changes the ACA made to the country’s healthcare system. Assuming the ACA survives this latest Supreme Court challenge, Biden has said he wants to “build on” the law.
The most significant change he would like to make to the ACA is creating a Medicare-like program that would be a “public option” — a health insurance program administered by the federal government, just as Medicare is, but available to people of any age — that could compete against private insurance plans in the marketplace. This idea was part of the original ACA but did not make it into the final law.
Original Blog on September 30, 2020: The Honorable Ruth Bader Ginsburg, a U.S. Supreme Court Justice who has been a long-standing champion for women’s rights and the civil rights of all Americans, passed away earlier this month.
Justice Ginsburg also was a key defender of the Affordable Care Act (ACA), and her passing is creating discussion about the possibility of the Supreme Court ruling the ACA as unconstitutional. The court will be hearing the issue on November 10, 2020. We understand the uncertainty surrounding the ACA is difficult for employers, and we are here to help you understand and navigate any impact to your business.
What’s the background?
Back in 2012, Chief Justice John G. Roberts ruled that the ACA’s individual mandate penalty was a lawful use of Congress’ ability to tax and, therefore, the ACA was constitutional. However, because Congress amended the ACA in 2017 by reducing the individual mandate penalty to $0, several conservative states argued that Roberts’ ruling no longer applied and that the entire ACA should be ruled unconstitutional. For a history of the court cases, please see our previous blog here.
A Texas district court sided with these states, ruling that the law is unconstitutional. The ruling was appealed and then sent back to the District Court for further consideration. Both sides of the case appealed to the U.S. Supreme Court. Recently, the Supreme Court agreed to hear the case on November 10, just a week after this year’s U.S. presidential election. The Supreme Court is not expected to rule on the case until next Summer.
Some experts (including those who are both for and against the law) claim a ruling against the entire ACA violates established legal standard. They say, 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.
The Supreme Court has upheld the constitutionality of the ACA twice in previous challenges. Some politicians and pundits have indicated that Justice Ginsburg’s death results in the ACA having less protection from being ruled unconstitutional because a new conservative Justice could be appointed in time to participate in the hearing, thereby impacting the balance of court opinion.
Just recently, President Donald Trump has nominated Amy Coney Barrett, a conservative judge, to the Supreme Court, and will attempt to have her appointed prior to the election. Whether she will join the court to hear the ACA case, and how she would rule on the case if she is appointed, is very unclear. If she is not appointed, and there is a tie 4-4 ruling, the case will go back to the District court, and then likely appealed again to the Supreme Court, resulting in months or years before any final ruling would be made.
Guidance today, from Health e(fx)
At Health e(fx), we understand how this seesaw barrage of news and information can be confusing for employers. Be assured that we are closely monitoring the situation and we are able and ready to guide you through whatever change, if any, to the ACA may come. The very core of our company is based on helping employers navigate change, and the current situation is no different.
What is important to understand is that any Supreme Court ruling (or legislative action) regarding the ACA will not be made in time to impact current 2020 reporting requirements. As long as there is an employer tax law, employer reporting is still required. And, as long as there is money to be collected, the Internal Revenue Service has indicated it will continue to assess and collect ACA employer reporting penalties.
You can also be assured that news on this front will continue to evolve. Health e(fx) will keep you informed every step of the way. Here are a couple additional resources that you may find helpful:
- SHRM: How the Supreme Court Could Rule on the Affordable Care Act
- KFF: Potential Impact of California v Texas Decision on Key Provisions of the Affordable Care Act
There are many different paths this case and the ACA could take, and we stand prepared to pivot as needed to support your health reform needs.