The Affordable Care Act (ACA) survived its third major challenge in the Supreme Court on June 17, 2021. In this case, two individuals and 18 states challenged the health care law by arguing they suffered financial injury because of the ACA’s individual mandate. Ultimately, in a 7-2 opinion, the Court ruled that the plaintiffs had not suffered any direct injury from alleged unlawful actions and therefore had no standing to sue. Many employment law experts believe that this ruling serves to preserve the ACA by minimizing the chances of winning a legal battle to overturn it completely.  

The Affordable Care Act has been the “subject of relentless Republican hostility” since it was signed into law by President Barack Obama in March 2010. Despite these objections, Congress has failed to repeal the legislation, the ACA has survived two previous Supreme Court challenges, and the law has gained in popularity as it becomes a familiar part of the healthcare system. In fact, as of February 2021, 54% of American adults have a favorable view of the ACA according to a Kaiser Family Foundation poll. There are several ACA provisions that are popular across party lines including coverage for pre-existing conditions and adult children up to age 26.

What to expect from the Biden Administration and Congress

In a recent statement, President Biden said that the Supreme Court’s decision “affirms that the Affordable Care Act is stronger than ever” and will allow his administration to protect and build on the law. For example, in the American Rescue Plan Act of 2021 (ARPA) temporarily expanded the scope and eligibility of the ACA’s tax credits for marketplace health care coverage and President Biden is proposing to make these changes permanent as part of the American Families Plan.

Additionally, President Biden has vowed to lower prescription drug costs for everyone as well as reduce health insurance premiums and deductibles for those who buy coverage on their own. He has also pledged to create a public option that would be available through the marketplace. Congress is actively working on several legislative proposals; some Democrats are pushing for larger initiatives like Medicare for all while Republicans are focusing on how to address issues like affordability.

How will ARPA affect the ACA’s future?

The subsidies included in the ARPA expand coverage, affordability, and access to health insurance through the ACA. As we discussed in a previous blog post, many Americans still find premiums to be high and out-of-pocket costs burdensome. The refundable credit helps eligible individuals and families cover the cost of premiums through the marketplace, expands eligibility by removing the upper income limit, and makes the premium tax credit (PTC) more generous for those eligible. These temporary provisions are retroactive to January 1, 2021 and will continue through 2022. President Biden hopes to make these changes permanent so that more people will continue to qualify for a subsidized plan and pay less than before.

What does the ACA ruling mean for employers?

Businesses must ensure they are complying with employer reporting requirements under the ACA, which are separate and distinct from the individual mandate. The ACA requires insurers, self-insuring employers, coverage providers, and applicable large employers (ALEs) to provide statements to employees detailing the health care coverage offered to them. ALEs are generally defined as businesses with more than 50 employees. Employers who do not comply may face penalties from the IRS if the appropriate forms are not furnished.

For small businesses with fewer than 50 employees, the higher ACA subsidies could work to minimize employer benefit costs and increase access to quality healthcare. Though not required to offer health insurance, many small businesses with fewer than 50 full-time or equivalent employees choose to do so anyway at significant cost to both employer and employee. Given the likelihood that the expanded ACA tax credits will become permanent and the ACA’s future is on solid ground, small employers now have more options to connect their employees with quality, affordable health care coverage through the ACA marketplaces.  

According to Small Business Majority, more than 5.7 million small business employees or self-employed workers are enrolled in the ACA marketplaces, and more than half of all ACA marketplace enrollees are small business owners, self-employed individuals, or small business employees. In a press release, Small Business Majority noted, “After more than a decade of nearly endless challenges to the ACA, we hope that this decision . . . will give peace of mind to small businesses that had wondered if they would have their health coverage ripped away from them. Had even a portion of the ACA been struck down, it would have caused a rapid rise in healthcare costs, and created additional uncertainty…”

We’re here to help your business

To keep up with all the changing legislation and take advantage of new assistance programs, it’s important to have employee benefits and payroll software and services that work as hard as you do. Solution providers like Asure help you automate all the complex moving parts associated with benefits administration and payroll, provide supporting documentation, and maintain the reports required to stay compliant.