Supreme Court Upholds Affordable Care Act; Employer Mandate Continues
The Supreme Court ruled 7-2 today that the 18 states who brought a lawsuit challenging the constitutionality of the Affordable Care Act (ACA) lacked standing to sue. The states were led by Texas and focused on the elimination of the individual mandate tax penalty. They argued that without it, that clause was unconstitutional, and it was not severable from the remainder of ACA.
While the November 2020 oral arguments spent much time discussing severability of the individual mandate, the justices did not comment on any other questions posed by the lawsuit and focused that the states did not have sufficient authority to bring forth the lawsuit. “We do not reach these questions of the Act’s validity, however, for Texas and the other plaintiffs in this suit lack the standing necessary to raise them,” wrote Justice Stephen Breyer.
Employers have been closely watching the case to plan for any changes to their ongoing efforts to comply with the employer mandate. These include measuring and tracking eligibility of employees, calculating and preparing 1095-C tax forms and 1094-C Internal Revenue Service (IRS) submittals, as well as the growing obligations to states with their own individual mandate and employer reporting requirements. The ruling today leaves employer obligations firmly in place.
The IRS continues to review prior-year submissions and issue penalty demands in the form of Letter 226J. Recent evidence from current Tango clients shows they are reviewing forms from the 2018 tax year and are actively requesting clarification or payment from employers who either did not meet the 95% offer threshold or did not offer an eligible employee coverage when the employee received a Premium Tax Credit from the exchanges.
Over 31 million Americans are now enrolled in ACA-generated insurance plans. The Biden Administration opened a special enrollment period from February through mid-August that has added 1.2 million new insured, with many of them now qualifying for Premium Tax Credits due to the administration’s qualification expansion. Americans who earn up to 400% of the federal poverty level can now qualify for a tax credit, up from the 100% threshold previously. This expansion and activity have increased the penalty threat to employers with more employees eligible for the tax credit and taking advantage of the special signup period.
Tango Helps Employers Comply with the ACA
Now is the time to refocus effort on the ACA. We recommend following our guide to build a business case for outsourcing ACA compliance to a trusted vendor. Not only will this save time and allow you to focus on other benefits priorities, but your organization will also achieve peace of mind by allowing an ACA vendor to ensure you are fully compliant with minimal effort.
Please contact us if you’ve been managing ACA filing on your own and need help or are not happy with the results you’ve had with your vendor. We offer a complete ACA reporting solution focused on accuracy—we even help our clients respond to IRS penalties and comply with state individual healthcare mandates.
Categorized in: ACA