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The Affordable Care Act may have avoided the possibility of being removed once and for all, as the Supreme Court hearing last week suggests.
The California v. Texas court case that asserts that the Affordable Care Act is unconstitutional without the Individual Mandate was argued before the U.S. Supreme Court on November 10. While a final decision was not reached at this time, the outcome of the arguments suggests that the healthcare law is likely to remain.
As a recap, the Supreme Court will rule on two separate questions. First, whether the federal Individual Mandate, with the penalty set to $0, is constitutional and second, if the mandate is unconstitutional, to what extent can it be “severed” from the remainder of the ACA.
Throughout the oral argument, lawyers for both sides once again landed on the longstanding federal judicial doctrine, severability. Severability dictates that the court only “sever” or remove the unconstitutional portion of legislation and provisions inextricably linked to it and leave the rest of the law in place. In this case, those arguing against the ACA say the Individual Mandate (the federal law requiring individuals to obtain health insurance, pay a penalty, or obtain a waiver) is unconstitutional. Under the doctrine of severability, the Individual Mandate, if found by the Supreme Court to be unconstitutional, could be severed, while leaving other parts of the ACA, such as the Employer Mandate, intact.
Key Justices signaled agreement that applying severability would be appropriate. Republican-appointed Justice Brett Kavanaugh 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, the provisions regarding pre-existing conditions and the rest.”
When discussing Congress’s decision to reduce the ACA’s Individual Mandate penalty to $0, Chief Justice John Roberts said to Texas Solicitor General Kyle Hawkins, “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.”
If Kavanaugh and Roberts both side with the three liberal-leaning justices, the ACA will again be upheld by the Supreme Court, making this the third time the law has survived a legal challenge. And based on their assertions in the latest discussion, it looks as if they just may do that.
While a decision regarding the future of the ACA will not be reached until mid-2021, the overall turnout of the oral arguments echoes a larger theme taking shape across the U.S., and that is that Americans don’t want to lose the ACA. A recent Kaiser Family Foundation poll reiterates this sentiment and shows that the majority of Americans are in support of the ACA, and don’t want the Supreme Court to shut it down. States are upholding taxes that support individual health ACA health exchanges and are passing their own Individual Mandate legislation.
As the evidence suggests, it’s becoming more and more clear just how important the ACA is in the U.S. healthcare ecosystem. With the COVID-19 pandemic breaking new U.S. records, access to affordable health care may be more urgent than ever before. And with President-elect Joe Biden taking office in 2021, expect more advancements coming to the healthcare law in the near term.
With the ACA remaining the law of the land, employers will still need to comply with the healthcare law’s Employer Mandate. As a reminder to employers in conjunction with the Employer Shared Responsibility Payment (ESRP), the ACA’s Employer Mandate, Applicable Large Employers (ALEs), organizations with 50 or more full-time employees and full-time-equivalent employees, are required to offer Minimum Essential Coverage (MEC) to at least 95% of their full-time workforce (and their dependents) whereby such coverage meets Minimum Value (MV) and is affordable for the employee, or be subject to Internal Revenue Code (IRC) Section 4980H penalties.
If your organization needs assistance in complying with the Employer Mandate, you should contact us to have an ACA Penalty Risk Assessment performed to learn the potential penalty exposure. The IRS is currently issuing Letter 226J penalty notices for the 2018 tax year.
