ACA Has Been Ruled Unconstitutional – What Will Be The Impact On Your Business?

ACA Compliance Health Insurance

Article contributed by Valiant Solutions

All over the news in the past few weeks was the recent ruling by a federal judge in Texas, calling the Affordable Care Act (ACA) unconstitutional. While this decision now opens the entire healthcare program up for debate, there currently is no impact on businesses.

ACA ObamacareJudge Reed O’Connor of the U.S. District Court for the Northern District of Texas made his ruling from a lawsuit filed by the state of Texas and 19 other states earlier this year.  O’Connor’s argument and ruling stems from the Tax Cuts and Jobs Act (TCJA) passed in 2017, which invalidates the “individual mandate” penalty for not having insurance in the ACA.  This invalidation, the judge ruled, calls for the entire ACA to be invalidated.

While there is a lot of debate already on this issue, one of the focus points for businesses is what this means for ACA Compliance in the near term. “First and foremost, this ruling has no immediate impact on the health insurance landscape”, says Todd Bellistri, President and CEO of August Benefits, a leading consulting firm and expert in ACA Compliance. “All provisions of the ACA, including the online marketplace, premium subsidies, employer reporting and IRS enforcement – remain the law of the land.”

The Most Likely Outcome of the ACA Ruling

This ruling is far from reversing ACA, as there are many moving parts to overturning the ACA. In reviewing the ruling, Bellistri envisions two potential scenarios:

Scenario #1: The court of appeals will agree with the Texas ruling –  sending the case eventually to the Supreme Court.  The timeline on this scenario would likely go through the end of 2019 – possibly into 2020.  Notably, the 5 Supreme Court judges who have previously ruled in favor of the ACA remain on the court (there are a total of 9 judges on the Supreme Court).

Scenario #2: The court of appeals will disagree with the Texas ruling – and reverse the decision – ruling the ACA is in-fact constitutional.  This is likely to occur in Spring 2019.  Under this scenario, it is unlikely the case would get to the Supreme Court.

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There is another key dynamic in the ruling, one that will take a decidedly political turn.  If the ruling stands and it is taken to the Supreme Court toward the end of 2019, this will ultimately become a central topic of focus for the 2020 election cycle.  Candidates will no doubt address their stance on healthcare and ACA impact.

What does this mean for business seeking ACA Compliance?

In truth, nothing in the near-term, or even throughout 2019.  As stated above, the ruling will most likely make its way throughout the judicial system, and, until a final ruling is handed down, ACA Compliance is still very much the law, and companies need to ensure they are able to comply with the regulations. 

How much of an impact?  Well, the Congressional Budget office and Joint Committee on Taxation (CBNO) projects employer responsibility penalties totaling $200 Billion over a 10-year period (this was a projection made before the ruling came down, however). 

ACA CompliancePerhaps more relevant to most businesses is the failure to provide health insurance.  Many businesses may think that since there is a ruling that potentially invalidates the ACA, that they need not comply.  This is not the case, and the fines can be significant if you don’t meet the requirements. In fact, failure to offer any health insurance coverage under the ACA will result in a fine of $2320 per Full Time Employee FTE.  This can add up if you have a number of employees that fall under ACA eligibility. 

ACA Compliance Health InsuranceEven if you comply, the fines associated with not filing with the IRS or furnishing the proper 1095-C forms for your employees can result in a $1000 fine per FTE, and $250 per missing form.  “Fines such as these can have a major impact on a business,” says Bellistri.  “I’ve seen penalties issued from the IRS to businesses, both large and small – that range from $40,000 to well over $1M.”

How to stay on top of ACA Compliance and Mitigate Risk

While there is a level of investment that an organization must take on to provide coverage for Affordable Care Act compliance, the risks associated with not making that investment is very high and can potentially bankrupt a business.

The best thing that companies should do in their business is mitigate risk in ACA fines and work with providers in the market to manage and track their eligibility and applicability to ACA, and understand the impact of these compliance risks, with help from experts and solution providers. By building a system that allows you to manage and track your compliance within your workforce, and provide you with real-time visibility into eligible employees, the cost options, and the proper regulatory reporting, you can take the manual effort out of the equation. This way, whether ACA is mandated or not, you will have a system that protects you and your employees.

For more information on learning how ACA Compliance impacts you and what you can do to mitigate risks, check out Valiant’s solution for ACA Compliance, in partnership with August Benefits Nimble Reporting platform.