Just when you thought the ACA was finally out of the line of fire, another lawsuit questioning its constitutionality makes its way to the forefront.
This time it’s an attack on the ACA’s free preventive care services, which make things like anti-smoking programs, cancer screenings, substance abuse counseling, and yes, COVID-19 vaccinations, free or of low cost. Section 2713 of the ACA, known more commonly as the preventive care provision, ensures that covered individuals obtain certain health services without a copayment or deductible.
Late last week, Northern Texas District Judge, Reed O’Connor, the same judge who ruled the ACA was unconstitutional without the Individual Mandate, issued a similar ruling regarding the healthcare law’s preventive services.
ACA preventive care court case background
In the case of Braidwood Management Inc v. Xavier Becerra, formerly known as Kelley v. Becerra, the plaintiffs assert that the requirement for employers to contribute towards preventive care costs infringes on their conservative religious beliefs, specifically violating the Religious Freedom Restoration Act.
The reason for O’Connor’s decision is due to the fact that the ACA’s free preventive care services also cover costs for contraception, and pre-exposure prophylaxis, an HIV prevention medication.
In their original 2020 statement, the plaintiffs of Braidwood Management assert that the ACA’s preventative care costs force them and other religious employers “to provide coverage for drugs that facilitate and encourage homosexual behavior, prostitution, sexual promiscuity, and intravenous drug use.”
It’s important to note that O’Connor’s ruling on the ACA’s preventive care coverage is focused on services that impact their religious views and does not apply across the broader procedures of the ACA’s provision. For example, the ruling left intact services for women and children, including mammograms and autism screening, respectively.
What happens next?
While the decision is a setback for the ACA, it is currently unclear how exactly the ruling will be applied. O’Connor asked both Braidwood and Beccera to submit additional details explaining the scope of how the decision should be applied, as well as possible remedies. Additional information is forthcoming.
There are three potential outcomes following the collection of both parties’ additional details. O’Connor could rule that:
- The ACA’s preventive care costs only apply to the single employer, Braidwood Management
- The court ruling applies to all employers and individuals in the state of Texas
- ACA preventive care costs are unconstitutional and therefore should apply to all U.S. employers
Since the application of O’Connor’s ruling has not yet been determined, the provisions of the ACA’s free preventive care stay as they are. If O’Connor decides to apply the ruling across all of the U.S. the Biden administration and Health and Human Service officials will likely intervene.
Already, advocacy groups and leading health officials have spoken out against the decision, saying it would have devastating effects on American healthcare.
Chair of Protect our Care advocacy group Leslie Dach said, “The free preventive care guaranteed by the ACA for over 150 million Americans has become a bedrock of the American healthcare system, improving health outcomes, reducing disparities in care, and cutting consumer health care costs.”
Future of the ACA
The news of this case comes at an otherwise good time for the now 12-year-old healthcare law. Open enrollment reached an all-time high last year, uninsured rates are at historic lows, and the average costs of healthcare premiums remain low, thanks to initiatives like the American Rescue Plan and Inflation Reduction Act.
On the employer side of the ACA, tensions are rising. The IRS recently indicated a renewed focus on tax enforcement, including the ACA’s Employer Mandate. With 87,000 additional tax examiners and more than $80 billion in new funding, the agency is well equipped to identify employer non-compliance.
As a reminder, the ACA’s Employer Mandate requires Applicable Large Employers or employers with 50 or more full-time employees and full-time equivalent employees to:
- Offer Minimum Essential Coverage to at least 95% of their full-time employees (and their dependents) whereby such coverage meets the Minimum Value
- Ensure that the coverage for the full-time employee is affordable based on one of the IRS-approved methods for calculating affordability
With attention shifting now to the escalating court case in Texas, employers should not lose sight of their ACA compliance efforts. The 2022 reporting season is a few short months away and this time around it may be more challenging than in previous years.
For information on all the new details unique to the 2022 filing season, including new state filing deadlines, tax enforcement efforts, new 1094-C and 1095-C forms, and IRS enforcement activity, register for our upcoming webinar, Preparing for the 2022 ACA Reporting Season below.
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To gain invaluable insights on penalty amounts, affordability percentages, filing deadlines, expert tips for responding to penalty notices, and proven strategies for minimizing IRS penalty risk, download the ACA 101 Toolkit.