On Friday, December 14, 2018, the Affordable Care Act (ACA) was ruled unconstitutional. Few of us saw it coming, including employers and HR professionals.
After all, you’ve just completed your open enrollment period for 2019, after carefully verifying that your health plans meet all the ACA’s minimum value and affordability tests.
Now, to further comply with the employer mandate, you’re bracing yourself for the preparation of Forms 1094-C and 1095-C in early 2019. Or, given the news…are you?
How the ACA Ruling Unfolded
After hearing a case brought by 20 Republican state attorneys general, Federal District Court Judge Reed O’Connor of Texas ruled in their favor, agreeing that—because Congress eliminated the ACA penalties on individuals who don’t purchase health insurance—the individual mandate is no longer sustainable.
Furthermore, O’Connor concluded, because the individual mandate is such an intrinsic part of the Affordable Care Act, the entire law is unconstitutional.
On the other side of the courtroom, Democratic state attorneys general immediately announced that they would appeal. They later asked Judge O’Conner to clarify if he intends the ruling to go into effect before it can be reviewed on appeal.
As we post this, O’Connor has yet to respond. But because the ruling was a “declaratory judgment”—not an injunction—most legal experts predict that it will not have any immediate impact on the ACA.
In addition, many speculate that once the case is heard in appellate court, the ruling will be overturned. In that event, it could end there—considering that many Republicans, swayed by public opinion, no longer support the full-scale destruction of the ACA.
Still, the case could make its way up to the Supreme Court in time for the term that begins in October 2019. While the Supreme Court has taken a conservative turn, it has upheld the Affordable Care Act twice before, when Chief Justice John Roberts unexpectedly voted with the courts four liberal stalwarts.
At this point, we simply don’t know what will happen.
Despite the ACA Ruling, It’s Business as Usual
While the events have been dramatic, for now, nothing appears to be changing for individuals or employers. In fact, on Monday, December 17, the U.S. Department of Health and Human Services issued this statement:
“The recent U.S. District Court decision regarding the Affordable Care Act is not an injunction that halts the enforcement of the law and not a final judgment. Therefore, HHS will continue administering and enforcing all aspects of the ACA as it had before the court issued its decision.”
In other words, as an applicable large employer, or ALE, you’re still subject to the ACA employer mandate and reporting requirements.
ACA Penalties Are Alive and Well for Employers
As you know, companies can face a host of ACA penalties for failing to meet the employer mandate. For example, if an employer fails to offer minimum essential coverage to 95% of its full-time employees and some receive tax credits on the Healthcare.gov exchange, it can be fined ACA penalties of more than $2,000 per employee.
If an employer fails to offer a health plan that meets the minimum value and affordability tests, it can be fined more than $3,000 per employee.
And of course, if an employer fails to file 1094-C and 1095-C forms on time—or correctly—it can be fined ACA penalties of $250 per form, up to a maximum of $3,000,000.
In fact, this summer, the IRS mailed more than 300,000 proposed penalty letters to employers for violations dating back to 2015. (The IRS can assess penalties dating back up to three years.) Some individual employers received notice of more than $1 million in penalties. ACA penalties still pose a threat for employers.
Make Sure You’re Maintaining ACA Compliance
In short, regardless of the recent ACA ruling, smart employers are taking steps to comply fully with the ACA employer mandate for the foreseeable future. Of course, each new year brings its own set of rules and deadlines.
Make sure your company is ready for 2019—download our 2019 ACA Checklist. From plan design to communication requirements to mandated forms and reporting, it’s a quick way to confirm that you’re ready, item by item.
At EPAY, we know maintaining compliance is challenging for employers. That’s why our advanced HCM system offers built-in labor and ACA compliance safeguards. It automatically generates 1094-C and 1095-C tax forms, too! Once you get your 2019 ACA Checklist, we invite you to check us out. Make sure you’re starting the new year off right!