How Should Employer’s Respond?
Texas U.S. District Judge Reed O’Connor ruled on Friday that the Affordable Care Act is unconstitutional. This announcement during the Marketplace open enrollment period has created questions for employers and employees alike. As a result, it has also reignited the discussion over healthcare in the country.
Even though the ACA reformed the individual market for health insurance, it also impacted employer-sponsored healthcare. Consequently, employers and their employees will have questions on how to proceed after this ruling.
So, let’s take a look to see where we’re at…
What Happened to the Affordable Care Act?
The basic logic behind the decision rested on the removal of the individual mandate penalty under the Tax Cuts and Jobs Act. The Supreme court decided that the taxing authority of Congress is what made the individual mandate (and the ACA) constitutional. Now that the ‘tax’ no longer applies, the individual mandate is unconstitutional. However, since it is not severable, that makes the whole law unconstitutional.
Judge O’Connor of the Federal District Court in Fort Worth said forcing people to buy health insurance through the individual mandate “…can no longer be sustained as an exercise of Congress’s tax power.”
What does this mean now for the Affordable Care Act?
First, even though the law has been ruled unconstitutional, it does not mean the law no longer applies. An appeal to the 5th circuit will most likely be filed shortly. It is expected that this will end up with the US Supreme Court. In other words, this will take time to sort out.
The California Attorney General Xavier Becerra stated,
“ACA has already survived more than 70 unsuccessful repeal attempts and withstood scrutiny in the Supreme Court.”
In the meantime, according to the healthcare.gov website, the
White House press secretary Sarah Sanders said in a statement,
“Once again, the President calls on Congress to replace Obamacare and act to protect people with preexisting conditions and provide Americans with quality affordable healthcare. We expect this ruling will be appealed to the Supreme Court. Pending the appeal process, the law remains in place.”
What happens if the Supreme Court Declares the Affordable Care Act Unconstitutional during 2019?
Unfortunately, my crystal ball seems to be on the fritz, but we can review where we were before the Affordable Care Act was passed.
The type of health plan will determine what happens. Let’s look at a how the ruling could impact employer-sponsored health plans, individuals covered in the Marketplace and those who have Medicaid insurance
Employer-sponsored group health plans
These plans can continue to operate as they do now. However, if the law is struck down then employers can decide if they want to make changes to eligibility and what is covered under the plan. This review will most likely happen during the planning for the next open enrollment period. In short, employers could make the same decisions regarding their health plans that they did before the Affordable Care Act.
The employer mandate would no longer apply. The reporting requirements would also cease. The threat of a Cadillac tax would finally be over as well.
However, the requirement to provide a Certificate of Coverage under HIPAA would again apply. Also, there could be difficulties in ‘taking away’ benefits (like covering children to age 26) from employees who like them.
Individual coverage through the Marketplace
People who have individual coverage through the ACA Marketplace could have more significant changes. Especially since the advance premium tax credit may no longer be available. This would mean those who don’t qualify for Medicaid but still get all or some of their premiums paid would no longer have this option.
The plans available could also go back to what they were before the Affordable Care Act was enacted. This means if someone has more then a 63-day gap in health coverage, pre-existing conditions could be applied under the HIPAA rules. It would also mean that older insureds would likely have to pay more for coverage than younger insureds.
On the other hand, individuals could once again tailor plans to fit their situation. Men and older women would no longer have to pay for a plan that covers pregnancy. Individuals who don’t have children would no longer have to pay for dental coverage.
However, knowing how slowly the courts and Congress work I don’t believe it will change during 2019.
Medicaid under the Affordable Care Act
Individuals who were put on Medicaid could also be affected if the additional money provided to some states under the ACA is no longer available. There would be less money, so states may have to adjust their eligibility requirements.
Again, this is more likely to happen after 2019 in my opinion.
The future of the Affordable Care Act
It would be nice to travel to the future, but unfortunately I’ve run out of fuel for the Flux Capacitor. The unknowns here are how the insurance market will react and what Congress or the individual states may do if the law is reversed. Some changes have already happened and more are sure to come. Employers should keep an eye out for future changes.
What should employers do?
For now, employers should continue to comply with the provisions of the Affordable Care Act. Employees who enrolled in a Marketplace plan for 2019, will continue to have coverage.
You should make sure your human resource staff, managers and supervisors are ready to answer questions like:
No, employer-sponsored group health coverage will remain the same until the next open enrollment period. While the employer reserves the right to change the health coverage, we will notify the employee of any future changes.
While the answer is unclear, currently the White House has stated that the ACA will remain in place while the court process proceeds. Also, the Healthcare.gov website has indicated that the ruling does not affect this year’s open enrollment. We would suggest you keep checking the Healthcare.gov website to learn about any changes.
Yes, for now. Children up to age 26 are currently eligible for coverage under our health plan(s). We will notify the employee if this changes in the future.
Yes. Pre-existing conditions will be continue to be treated the same under our health plan(s). We will notify the employee if this changes in the future.
At this point it is unclear. It will depending on many factors as the ACA ruling makes it way through the courts. Congress and States may also pass laws to address the issue. As always, we will keep you informed of anything that affects your coverage under our health plan(s).
Some employers may want to get ahead of the questions by providing an employee communication on the recent Affordable Care Act judgement.
But for now, until the legal process is complete and/or Congress passes further legislation, nothing under the Affordable Care Act (Obamacare) has basically changed.
To stay up to date with how any changes will affect employers, consider becoming a member of the BCL HR Helper community. You can receive Free updates on the Affordable Care Act and many other regulations that affect your business.
BCL Systems, Inc.
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