Lawmakers have been working behind the scenes for the better part of the last three years to make serious modifications to the Affordable Care Act (ACA). Some of what they envisioned has been accomplished. However, much of the original law remains intact nearly a decade after it was signed.
No doubt that ACA compliance continues to be an issue for employers. Given the complex nature of the law, we provide comprehensive assistance to ensure our clients maintain compliance. It is with that in mind that we offer our ACA update for 2020. Below are the most important things you need to know for the coming year.
The Individual Mandate is Gone
You are undoubtedly aware that the Tax Cuts and Jobs Act of 2017 all but eliminated the individual mandate by repealing the penalty for not having qualifying health insurance. The penalty was still applicable through the 2019 tax year. It is no longer. Therefore, expect some of your employees to opt out of enrolling in your health insurance plan.
The Mandate Ruled Unconstitutional
As long as we are talking about the individual mandate, it is important to note that the Fifth Circuit Court of Appeals recently ruled the mandate unconstitutional in a case out of Texas. The ruling left a lot of questions unanswered, not the least of which is whether or not the individual mandate is severable from the rest of the ACA.
The Fifth Circuit only decided that the federal government cannot force people to purchase health insurance. They sent the case back to a lower district court to decide whether the rest of the ACA remains intact without the individual mandate. The case now rests with the Supreme Court after the Fifth Circuit's decision was appealed.
All of this is to say that nothing has changed from the employer's perspective, at least for now. Employers still must meet all of their obligations under the ACA. If the Supreme Court does uphold the Fifth Circuit's decision later this year, it could mean an end to the ACA altogether.
New State Mandates
A number of states have responded to the Fifth Circuit's decision with their own mandates intended to continue requiring health insurance coverage and simultaneously stabilize the market. If your business pays taxes in any of those states, stay abreast of any changes to your health insurance requirements.
We will close this post with a discussion of three ACA-related taxes that were done away with via the Further Consolidated Appropriations Act 2020, a budget bill signed into law by the president on December 20 of last year. In the bill were provisions to eliminate the following taxes:
- Cadillac Tax – The high-cost health plan tax affectionately known as the 'Cadillac Tax' will not be implemented in 2022 as was originally planned. The tax would have been upwards of 40% on all employer-sponsored health plans with annual premiums in excess of $10,000 for singles and $27,500 for families.
- Medical Device Tax – This controversial tax applied to nearly every new medical device on the market. Its repeal should, in theory, help control health care costs by preventing unnecessary increases in medical device prices.
- Health Insurance Tax – The Health Insurance Tax assessed a fee on insurance carriers. It will be phased out after 2020. This will not have any effect on 2020 premiums, but it should help next year.
The ACA is still the law of the land. As long as it remains intact, we will stand by to assist our clients as they seek to maintain full compliance.