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Since Biden took office on January 20, 2021, several advancements to the Affordable Care Act followed, so we thought it best to recap on the ACA reforms that have happened so far and what to expect moving forward.
Most recently, California’s Attorney General Xavier Becerra was sworn in as the new Health and Human Services (HHS) Secretary. One of the reasons Biden nominated Becerra to fill the HHS role is because he is a known supporter of the ACA and has defended the law during the California v. Texas court case. After being appointed, Becerra acknowledged that Biden wants to build on the ACA and said, “that will be my mission, to achieve the goals that President Biden put forward, to build on the Affordable Care Act.”
Becerra is also a long-time advocate of women’s rights in healthcare, specifically reproductive. He received a “100% approval rating from the NARAL Pro-Choice America and Planned Parenthood.” In 2017, Becerra sued the Trump administration over its restrictions on abortion and had the case go all the way to the Supreme Court. While unsuccessful in the outcome, he defended a California law “that required crisis pregnancy centers to provide information about abortion,” according to a post by Modern Healthcare.
Before Becerra assumed his new role, Biden signed into law the American Rescue Plan (ARP), which includes provisions that help strengthen the ACA. Perhaps the biggest advancement to come from the ARP is the expansion of Premium Tax Credit (PTC) eligibility.
Americans with income up to 150% of the Federal Poverty Level (FPL) can obtain silver quality health plans for $0 monthly premiums, in addition to reduced deductible costs. The ARP also expands the pool of who can qualify to beyond 400% of the FPL, a big move for the ACA, since the cap was previously set to 400% and only in certain states. As a result, the maximum contribution towards the benchmark healthcare option on state and federal marketplaces is capped at 8.5% of the household income.
For employers, it has yet to be seen if the reduction in premium costs will apply to the ACA’s affordability percentage for the 2021 tax year. The IRS has not yet amended any regulations.
Prior to the passing of the ARP, Biden signed two executive orders that essentially reversed the damages the Trump administration made to the ACA. The first extends special enrollment periods on the federal HR.gov health exchange through May 15. A change that has helped Americans access healthcare with much more ease. Individual states like California have also extended their special enrollment periods. Special enrollment periods were also accompanied by outreach efforts, such as paid advertising and promotions around the newly accessible healthcare options.
The executive order also rolled back Association Health Plans and short-term, limited-duration insurance. These types of healthcare options, while cheaper, provide fewer benefits and do not always meet ACA requirements. Also included in the executive order is language that gives federal agencies the authority to review existing regulations to identify aspects that are inconsistent with the ACA.
Biden’s second executive order relates to abortion and rescinds the Mexico City Policy. According to the Kaiser Family Foundation (KFF), the Mexico City Policy is a U.S. government policy that – when in effect – has required foreign NGOs to certify that they will not perform or actively promote abortion as a method of family planning while “using funds from any source (including non-U.S. funds) as a condition of receiving U.S. global family planning assistance and when in place under the Trump administration, most other U.S. global health assistance.” It is also known as the “global gag rule” and was rescinded as one of the first executive actions during the Obama administration.
In less than three month’s time, Biden is already reshaping the American healthcare system and is focusing resources back on the ACA. In terms of what to expect moving forward, Biden may reintroduce the federal Individual Mandate, a move that would completely upend the current Supreme Court case that asserts the healthcare law is unconstitutional without it.
Another advancement to expect in the near term relates to the expansion of Medicare and Medicaid. Last summer, Missouri and Oklahoma both passed expansions of the healthcare programs as COVID-19 cases continued to spike across those states.
An area of the ACA that continues to remain in full effect is the Employer Mandate. Under the ACA’s Employer Mandate, Applicable Large Employers (ALEs), which are employers 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.
The IRS is currently issuing Letter 226J penalty notices to employers identified as having failed to comply with the ACA’s Employer Mandate for the 2018 tax year. If your organization is unsure of how to comply with the ACA’s Employer Mandate, download the 2021 ACA Essential Guide for Employers to learn what is expected of you.
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.