Democrats Gain Senate, Paving the Way for Biden’s ACA Agenda
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The results from last week’s Senate runoff race in Georgia have given Democrats control of the Senate, paving the way for Joe Biden’s presidency and his agenda for the country, including with regard to the ACA.
In Georgia, the incumbent republicans David Perdue and Kelly Loeffler conceded to Democrats Jon Ossoff and Raphael Warnock, respectively, and with the Associated Press having officially named Joe Biden the winner of the state of Georgia, this represents a major shift in politics for the state.
Georgia’s outcome is an especially important one as it now evens the playing field in the Senate at 50-50. However, with Vice President Kamala Harris as the designated tie-breaker on Senate debates, Democrats will ultimately hold the majority. Coupled with the majority in the House of Representatives, the Biden administration will be taking office with a Democrat-led congress, making Biden’s legislative plans all the easier to pass.
Among Biden’s immediate plans upon taking office are actions pertaining to U.S. healthcare and the Affordable Care Act. It is possible that the administration could reinstate the federal Individual Mandate penalty, a move that would be largely supported, as many states have passed their own version of the law since the federal mandate was zeroed out.
This move would require everyone in the U.S. to obtain health coverage that meets quality and affordability standards or face a penalty. The reinstatement of the mandate penalty would undoubtedly cause more residents to enroll in coverage. Employers, that means more of your workforce may choose to enroll in the employer-sponsored healthcare.
Biden has also said that his administration will eliminate the ACA’s 400% household income threshold for premium tax credit (PTC) eligibility, opening up affordable healthcare to a much larger pool of Americans. With the requirements for premium tax credit eligibility essentially removed, the number of credits applied for and issued will likely increase. It should be noted that regardless of what the Biden administration does regarding PTCs, they have already been anticipated to increase this year.
It is also possible that the Biden administration will pass legislation to lower the cost of health insurance bought and obtained through both state or federal marketplace, to specifically 8.5% of total income instead of the current 9.86%. This contribution is separate from the affordability threshold that employers set for their employees, but with more affordable healthcare being offered through the marketplace, we can expect to see an increase in enrollees. More enrollees mean a greater possibility for ACA penalties being issued by the IRS to employers who fail to offer coverage to employees.
With Democratic control in Congress, Biden’s ambitious reforms for many of the policies established by the Trump administration are to be met with open arms. With a number of ACA enhancements likely to pass, employers need to rethink their ACA process for complying 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.
With legislation coming into play bolstering the ACA, now is the time for employers to reassess their ACA compliance processes. Contact us to learn how ACA Complete can help your organization comply with the healthcare law.
For information on ACA penalty amounts, affordability percentages, important filing deadlines, steps for responding to penalty notices, and best practices for minimizing IRS penalty risk, download the ACA 101 Toolkit.
