By - November 24, 2020

Why 2021 Is the Most Important Year for the ACA

ACA supreme court

The Affordable Care Act (ACA) has largely been targeted for changes with little results since 2014. Over the next seven months, there are important events that HR professionals involved in ACA compliance and reporting should watch.

End of 2020: Supreme Court Hearing

While the ACA remained a dominant topic during the entire election cycle, the key event of 2020 was the Supreme Court oral arguments on the Texas vs. California (aka “is the individual mandate constitutional”) lawsuit. It appears the chances of the entire ACA going away is highly unlikely given that two of the conservative justices indicated severability would allow one part of the law (individual mandate penalty) to be separated out while the rest of the law would remain intact.

One of the conservative justices, John Roberts said, “I think it’s hard for you to argue that Congress intended the entire act [to] fall if the mandate were struck down, when the same Congress that lowered the penalty to zero did not even try to repeal the rest of the act.” Fellow conservative justice, Brett Kavanagh, said, “it does seem fairly clear that the proper remedy would be to sever the mandate provision and leave the rest of the act in place.”

A ruling is not expected until June 2021. In the meantime, the focus has shifted to President-elect Joe Biden and the senate run-off races in Georgia.

January 2021: Senate Runoff, Inauguration, and the Biden Administration

On January 5, 2021, Georgia will hold runoff elections for the two remaining Senate seats. Currently, the Republicans hold 50 seats and the Democrats have 48 seats. If Republicans only pick up one seat, they will retain their majority within the Senate. This would make it challenging for the future Biden administration to push through ACA legislation. If the Democrats pick up both seats, they will have an edge with Vice President-Elect Kamala Harris casting the deciding vote in case of a tie.

Depending on the Senate landscape, the weeks after Biden’s inauguration will be critical for ACA. During Biden’s campaign, he pledged to invest in changes to the Affordable Care Act, including the creation of a Medicare-like public insurance option that anyone can select. He also would like to increase the current cap on who qualifies for federal subsidies and add funding back to advertising ACA to increase participation.

The “public option” is effectively an expansion of Medicare, allowing those of any age to enroll. This would directly compete with private insurance plans. For employers, this option could present competition to traditional employer-sponsored insurance, with smaller premiums that could draw employees away from their employer’s plans.

Without a Democratic majority in the Senate, which will be determined by the Georgia runoff election, the chances for a “public option” are slim and it’s likely that COVID-19 legislation will be top of mind as the country continues to battle the pandemic.

However, if the Senate make-up is evenly split, there would be an opportunity for the Biden administration to make immediate changes to the ACA ahead of a Supreme Court ruling, such as increasing the individual mandate penalty to $1.

January-April 2021: Federal and State Deadlines

Without a Supreme Court ruling or any other changes expected from the House and Senate to ACA reporting, employers will still be required to mail employees 1095-Cs by January 31st (or March 2nd, the extension automatically granted for the final time) and file with the IRS by March 31st.

Forms will also need to be filed for the second time with New Jersey (March 31st) and the District of Columbia (April 30th).

The States of California and Rhode Island have added required reporting for the 2020 tax year and granted extensions for filing. Rhode Island filings are due March 31st (instead of January 31st) and the California filings are due May 31st (instead of March 30th).

June: Supreme Court Ruling

Assuming no changes are made ahead of the ruling, the Supreme Court is expected to issue a decision in June 2021 on the Texas v. California lawsuit.


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