How the Supreme Court Could Rule on the Affordable Care Act
On Nov. 10, the U.S. Supreme Court will hear arguments on whether the Affordable Care Act (ACA) is constitutional, in whole or in part. The court is expected to rule on the matter before its term ends in June 2021.
Only those justices sitting on the court when the case is heard will vote, and it is not yet known if a new Supreme Court justice will be confirmed when the case is argued. A vacancy on the nine-justice court was created by the death of Justice Ruth Bader Ginsburg on Sept. 18.
In the meantime, "the health care law remains fully in effect during the litigation, including all employer coverage obligations and reporting requirements," said Chatrane Birbal, vice president of public policy at the Society for Human Resource Management.
Complex Case History
The Supreme Court's options for deciding this case are shaped by the complicated history of litigation over the ACA.
The origins of the case go back to 2012, when the court upheld the constitutionality of the ACA's penalty on individuals who lack health coverage—the so-called individual coverage mandate—as a justifiable exercise of Congress' power to tax.
In December 2017, however, President Donald Trump signed into law a tax bill that eliminated the ACA's penalty on individuals who lack health coverage. Afterward, several Republican state attorneys general, led by the state of Texas, filed a lawsuit arguing that the health care statute itself, or at least the parts of the act closely linked to the individual mandate, were no longer valid. Democratic states and the House of Representatives, led by Democrats, stepped in to defend the statute.
In December 2018, a Texas district court struck down the ACA but stayed its ruling pending appeal, concluding that the individual mandate is so connected to the law that Congress would not have passed the ACA without it.
On appeal, in Texas v. United States, a split panel of the 5th U.S. Circuit Court of Appeals deemed that the individual mandate was unconstitutional, but the panel instructed the district court to rehear the matter and "to employ a finer-toothed comb on remand and conduct a more searching inquiry into which provisions of the ACA Congress intended to be inseverable from the mandate."
However, on March 2, 2019, before the district court could carry out the appellate court's directive, the Supreme Court announced it would hear the case in its term beginning in the fall of 2020, blocking the lower courts from taking further action.
5th Circuit Ruling Was Narrowly Focused
When the 5th Circuit instructed the district court to rehear the matter and to focus on those ACA provisions that Congress intended to be "inseverable from the individual mandate," this suggested, legal analysts said, that the appellate court was unlikely to overturn the ACA in full.
"Only the individual mandate was declared unconstitutional, and the portion of the lower court's decision invalidating the rest of the Affordable Care Act [was] vacated," according to an analysis of the appellate ruling by Segal, an HR consultancy. As a result, "plan sponsors know that the entire Affordable Care Act will not be overturned."
Had the case proceeded at the appellate level, the 5th Circuit might have struck down those parts of the law directly related to the individual mandate. The appellate decision noted, for instance, that community rating, which prevents insurers from varying premiums within a geographic area based on age, gender, health status or other factors, might be among the provisions determined to be "inseverable" from the individual mandate, because the increase in revenue to insurers from the mandate was meant to offset the decrease from these restrictions.
The ACA's guaranteed-issue provisions, which ban insurers from rejecting coverage based on a person's pre-existing conditions, might also be inseverable, the appellate decision noted.
Supreme Court's Options
The Supreme Court has the following options when it decides the case, The Washington Post and other sources have reported:
- To dismiss the case on technical grounds, leaving the statute in place. The court could decide, for instance, that Texas and the individual plaintiffs lacked standing to bring the lawsuit.
- To affirmatively uphold the ACA.
- To uphold the statute while finding the individual mandate to be void without its penalty, essentially maintaining the status quo.
- To uphold the statute but void both the individual mandate and other provisions closely linked to the mandate.
- To strike down the law in full, although that option has been viewed as unlikely by legal analysts. Should it happen, however, the effect of the ruling would likely be delayed, giving Congress the opportunity to correct the statute's constitutional defects or to pass a replacement health care law.
According to an analysis by the nonprofit Kaiser Family Foundation, "If the Supreme Court adopts the position that the federal government took during the trial court proceedings and invalidates the individual mandate as well as the protections for people with pre-existing conditions, then federal funding for premium subsidies and the Medicaid expansion would stand, and it would be up to states whether to reinstate the insurance protections."
If that were to happen, Congress also could reinstate protections for people with pre-existing conditions.
Joe Biden, the Democratic presidential nominee, has voiced his support for the ACA, sometimes referred to as Obamacare, pointing out how it safeguards people who might not otherwise qualify for coverage. His campaign website says, "Because of Obamacare, over 100 million people no longer have to worry that an insurance company will deny coverage or charge higher premiums just because they have a pre-existing condition—whether cancer or diabetes or heart disease or a mental health challenge."
President Trump has also pledged to maintain these protections even as his administration supports the lawsuit that seeks to overturn the act. During his acceptance speech for the Republican presidential nomination, Trump said, "We will always, and very strongly, protect patients with pre-existing conditions, and that is a pledge from the entire Republican Party."
In Case of a Tie Vote
"If the case is heard by the current eight justices and results in a 4-4 vote, the justices could reschedule oral argument or delay consideration until [Texas vs. United States] can be reheard by a full Court," wrote Katie Keith, a former research professor at Georgetown University's Center on Health Insurance Reforms and a contributor to the Health Affairs blog. "This might mean Texas would be reheard later in the spring depending on the timing of confirmation."
Alternatively, "the Court could issue a 4-4 ruling, which would maintain the status quo and leaves the appellate decision intact. In this instance, the 5th Circuit's ruling would stand and the case would be remanded back to the district court," she noted.
If that is the outcome, "the ACA would remain in effect while the district court undertook a provision-by-provision severability analysis," Keith noted. "The litigation would continue for years as we await a new district court decision, another appeal to the 5th Circuit, and most likely a return to the Supreme Court."
Thinking Ahead "Employers will be wise to give some thought to how they might react to different outcomes, Mercer, an HR consultancy, advised. "For example, if some common provisions eliminated by the ACA like annual/lifetime dollar limits on essential health benefits, ending dependent coverage at age 19/23, or the previously mentioned pre-existing condition exclusions were permitted again, would an employer reshape their plan design to curb costs? If the employer 'play-or-pay' mandate (the 30-hour rule) were struck down, would an employer move full-time eligibility back to 40 hours?" Concluded Mercer's consultants, "There is much to consider with these possible ACA changes," should they come to pass. |
SOURCE: Miller, S. (23 September 2020) "How the Supreme Court Could Rule on the Affordable Care Act" (Web Blog Post). Retrieved from https://www.shrm.org/resourcesandtools/hr-topics/benefits/pages/how-the-supreme-court-could-rule-on-the-affordable-care-act.aspx
Congress OKs paid family leave for federal workers
First-time landmark benefits are rising to the surface come the new year. In 2020, federal workers will receive paid family leave for the birth or placement of a child. Read this blog to learn what paid family leave for federal workers will look like come the new year.
Congress has given the green light for federal workers to receive 12 weeks of paid leave for the birth or placement of a child. This first-time landmark benefit comes as lawmakers and influential CEOs, continue to advocate for a nationwide parental leave policy.
The Senate approved and sent the 2020 National Defense Authorization Act (NDAA), which includes the leave provision, to President Donald Trump Dec. 17. The House passed the bill Dec. 11. Trump previously said he would sign the bill into law, and Ivanka Trump tweeted Tuesday afternoon that the president would sign the legislation this week.
The NDAA, sweeping defense legislation, provides 12 weeks' paid parental leave for federal employees based on language of a bill sponsored by Rep. Carolyn B. Maloney, D-N.Y. The benefit takes effect Oct. 1, 2020.
The NDAA also includes a "3.1-percent pay raise for our troops [and establishes] the United States Space Force," according to a statement by the White House press secretary. Bipartisan congressional lawmakers allowed for the creation of the Space Force as the sixth branch of the military in exchange for the new parental-leave benefits, according to The New York Times.
Calls for private-sector leave
The new benefit is reserved for federal employees and highlights the fact that the U.S. is the only industrialized country without a nationwide federal parental leave policy or law, according to Maloney.
The congresswoman noted in her opening remarks that the U.S. is one of only two countries that do not provide workers with paid family or medical leave, a statement presidential candidate Andrew Yang made during the November Democratic presidential debates. (It's worth noting that this is not strictly true, according to reporting from Inc.)
"This agreement is not perfect," she said. "The Senate refused to approve paid leave for medical reasons. This provision covers only federal employees. So, it does not cover anyone working in the private sector."
Maloney, who has advocated for such a benefit for many years, added, "We will continue fighting for these Americans in the months and years to come. But despite these drawbacks, this is an amazing accomplishment."
Some state and local governments require paid leave for private-sector employees, but that patchwork of laws serves neither employees nor employers well, according to the Business Roundtable, an association of CEOs of American companies.
Ginni Rometty, chairman, president and CEO of IBM, sent Trump and congressional leaders a letter Dec. 12 on behalf of the council, urging them to enact federal legislation creating paid family and medical leave benefits.
"Legislation should provide uniform standards that apply to all covered employees and that adhere to the federal Family and Medical Leave Act requirements," the letter said. "Doing so would benefit employees needing coverage as well as help businesses challenged by the growing patchwork of competing and inconsistent state plans."
As private companies compete with the federal government for top talent, benefits could be a deciding factor, and studies have shown that employers can boost retention by offering such perks.
SOURCE: Estrada, S. (17 December 2019) "Congress OKs paid family leave for federal workers" (Web Blog Post). Retrieved from https://www.hrdive.com/news/congress-oks-paid-family-leave-for-federal-workers/569286/
3 ways Congress can meaningfully reform 401(k)s
This article from Employee Benefit Advisor's Alexander Assaley drives home three points on improving 401(k)s - (1) improve coverage, (2) update antiquated testing results, and (3) expand limits while maintaining choices. How do you, as an employer, feel about these points?
In both the House and Senate’s tax bills there are no significant changes made to 401(k), 403(b) and IRA retirement accounts — for now. Congress has preserved the majority of tax benefits. However, we are only getting started, and there is still room for improvement. The drafted bills will look different, perhaps significantly so, before getting finalized into law.
As our elected officials debate and negotiate tax legislation, I’d like to offer some input and advice on key characteristics and design structures that we should be advocating for with respect to retirement plans, and how advisers and benefits professionals can work to continually improve the private retirement system:
1) Improving coverage. One of the chief complaints from 401(k) critics is that many workers in this country don’t have access to a plan. Various research indicates that somewhere between 50%–65% of employees have access to a 401(k) or 403(b) and the remaining don’t.
This coverage gap primarily extends to part-time and “gig” workers, as well as small businesses with less than 30 employees. Retirement plan advisers and practitioners need to create forward-thinking solutions to provide these employees with access to employer-sponsored and tax qualified retirement plans.
Most of all, we can shrink the coverage gap if we get small businesses to establish plans. Both data and anecdotal evidence find that the biggest drivers for small businesses to create and offer retirement plans are 1) tax benefits to the owners and executives; and 2) simple, easy to use programs with minimal liability. This is where some of the tax policy or other reforms could really help.
2) Updating antiquated testing rules. While we often cite the $18,500 (or $24,500 for those eligible to make catch-up contributions) employee deferral limits for retirement plans in 2018, the practical nature is that a lot of highly compensated employees, HCEs, (including small business owners) are limited to contributing at much lower levels due to various non-discrimination tests.
While the spirit of non-discrimination testing is just — ensuring business owners and executives aren’t structuring their plans to limit or prevent their employees from benefiting, or inequitably benefiting owners and their family members — the current structure significantly dis-incentivizes the small business owner from offering a plan in the first place because they can’t maximize their benefit.
Let me be clear, we are big proponents of matching and profit sharing contributions, and want to see employers help their employees get on track for retirement too; however, the current safe harbor provisions with immediate, or short vesting schedules, along with cumbersome testing requirements, often cause too big of a hurdle for the small business owners to commit and therefore, short changes their employees with no plan at all.
I would love to see tax reform improve safe harbor provisions and/or testing components that might make it easier for business owners and HCEs save up to the limit without concerns of failed testing or hefty safe harbor contributions. Practically speaking, these workers need to save more in order to meet their retirement income needs, since Social Security will make up a small percentage of their income replacement, and the 401(k) is the best place to make it happen.
3) Expanding limits and maintaining choice. Just before Congressional Republicans announced their tax bill, a group of Senate Democrats unveiled a plan which would actually raise limits for 401(k) plans. While our research aligns with many other studies that the vast majority of savers don’t reach the annual limits, we would be in favor of expanding the limits — even if it only allowed for Roth-type contributions above the $18,500 (or $24,500) limits.
Additionally, we think an employee’s ability to select either Roth or pre-tax contributions is critical. While the tax preferential treatment of defined contribution plans is just one component that makes these vehicles so valuable, it has definitely emerged and remained as the “branding tool” that encourages so many workers to get into the plan in the first place.
Source:
Assaley A. (10 November 2017). "3 ways Congress can meaningfully reform 401(k)s" [Web blog post]. Retrieved from address https://www.employeebenefitadviser.com/opinion/3-ways-congress-can-meaningfully-reform-401-k-s
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Congress passes budget bill, what does it mean for employers?
Congress passed the Bipartisan Budget Act of 2015. President Obama released a statement Friday morning applauding Democrats and Republicans for their passing votes.
“I applaud the Democrats and Republicans who came together this morning to pass a responsible, long-term budget agreement that reflects our values, grows our economy and creates jobs,” President Obama said in the statement. “This agreement is a reminder that Washington can still choose to help, rather than hinder, America’s progress.”
The big picture on the bill approved a two-year budget deal that would increase spending limits and avert a damging default.
RELATED: Senate approves two year bipartisan budget agreement
What does the budget bill mean for employers?
The bill repealed the Affordable Care Act's provision requiring employers with more than 20 employees to automatically enroll a ful-time employee in a health plan if overage wasn't voluntarily chosen or declined by an employee. However, since 2012 regulators have not put great emphasis on the provision.
“Striking this redundant requirement off the books puts health decision-making back in the hands of American workers and their families, and provides employers with relief from potentially problematic and burdensome regulations,” Christine Pollack, vice president of government affairs at Retail Industry Leaders, told Employe Benefit Adviser. The RILA is a trade association representing more than 200 of the world’s largest retail companies, including Wal-Mart, Walgreens and Apple.
The bill also provides that the single-employer fixed Pension Benefit Guaranty Corporation (PBGC) premium would be raised to $68 for 2017, $73 for 2018 and $78 for 2019, and then re-indexed for inflation. The bill also bumps the due date up to the ninth calendar month beginning on or after the first day of the premium payment year. It was the tenth calendar month.
RELATED: Changes employers would see with the budget bill