Tag Archives: Affordable Care Act (ACA)

Can Employers Drop their Health Plan and Just Give Employees Cash Instead?

Contributed by Rebecca Dobbs Bush, July 23, 2019

stethoscope on cash cost of healthcare concept

Several years ago, a trend was emerging that consisted of third-party, private marketplaces where employers could have their employees purchase health care with an “allowance” of sorts. This “allowance” could be facilitated by an employer that set up a stand-alone Health Reimbursement Arrangement (HRA). The emerging trend was analogous to the way traditional pension plans evolved to 401(k)s. Then, before things could take off, the Affordable Care Act put a halt to it. Essentially, the ACA said that these stand-alone HRA plans broke the rules because they had annual limits. And, under the ACA, health plans were not allowed to have annual limits on the amount of benefits provided. So, employers moved on and tried to look for a different way to reduce the amount they were spending on health benefits for their employees.

Then, on June 13, 2019, the tide turned and the Department of Health and Human Services (HHS), the Department of Labor (DOL) and the Internal Revenue Service (IRS) issued a coordinated set of final regulations that essentially said they changed their mind.

To clarify a bit, the regulations are complex and a business is certainly not free to just start handing out cash to their employees instead of a health insurance card.  However, with the right plan documents in place and the correct administration followed, an employer can set up a scenario where an employee has an “account” that covers all or part of the expense for that employee to purchase individual coverage on his/her own.  In other words, an employer electing this path should make sure he or she is guided by the right attorney, insurance broker, and human resources team.

Why would this arrangement be helpful?  Think of it in this scenario…. Each year most employers hold their breath just a bit while they wait for their renewal rates to be provided by their carrier.  There is almost always some type of increase.  And at that point, an employer must make tough decisions about how much of that increase, if any, they can absorb for the employee.  Worse yet, most employees never really seem to understand or appreciate the full dollar amount the employer is paying on his/her behalf.

Now, in contrast, think about how an employer reimburses employees for cell phone expenses.  The employee individually purchases whatever plan that they want, spending more if they want, buying a nicer phone if they want, etc.  Each month, the employer simply reimburses each employee the same amount – regardless of whether they picked the basic or pricey plan.  Most employees easily understand what cell phone benefits exist and exactly how much the company covers.  It certainly makes things a bit clearer for an employee when they are involved in that transaction each month.

If a company can now potentially treat its health plan expenses the same way?  It could be a game-changer in successfully managing health care expenses. 

The Affordable Care Act after Texas v. United States

Contributed by Kelly Haab-Tallitsch, December 19, 2018

On Friday, December 14th, a U.S. District Court judge in the Northern District of Texas issued a ruling in Texas, et al., v. United States of America declaring the entire Affordable Care Act (ACA) unconstitutional, based on the requirement that individuals must buy health insurance or face a tax penalty. Previously, the U.S. Supreme Court upheld the ACA individual mandate as constitutional under Congress’s authority to tax Americans. But the Texas judge held that because the tax bill passed by Congress in December 2017 reduced the individual mandate penalty to zero, it is no longer a tax and no longer under Congress’ taxing power.

The broad ruling has left many employers unsure about their responsibilities under the ACA. Here are the key takeaways:

1.            The ACA remains in effect, for now.

The judge’s ruling in Texas v. U.S. is not an injunction requiring the government to stop enforcing the ACA. Rather, the ruling reaches a legal conclusion that the individual mandate is unconstitutional and the mandate is integral to the entire ACA. The controversial decision is likely to be appealed and the law remains in place pending the outcome of an appeal. Noting that the decision is not the final word on the ACA, the Department of Health and Human Services issued a statement that it “will continue administering and enforcing all aspects of the ACA as it had before the court issued its decision.”

2.            Applicable Large Employers (ALEs) must continue to comply with the ACA’s employer shared responsibility provisions.

The employer shared responsibility provisions of the ACA remain in place. ALEs (i.e. employers with 50 or more full-time equivalent employees (FTEs)) must continue to comply with such provisions, including the information reporting requirements due in early 2019. ALEs must also continue to offer qualifying coverage to 95% or more of their full-time employees (and dependents) or face penalties.

3.            The future of the ACA is unknown.

The decision in Texas v. U.S. will almost certainly be appealed to the Fifth Circuit Court of Appeals and potentially to the Supreme Court. The sweeping nature of the ruling invalidating the entire law is likely to be scrutinized in the higher courts. Opponents of the Texas judge’s decision are likely to argue that the individual mandate is severable from the remainder of the ACA and even if found to be unconstitutional, the remainder of the law should stand.

What’s the bottom line?

Nothing has changed for employers. As noted above, the Texas judge’s decision is likely to be appealed and the case may be winding its way through the courts for months. Employers should continue their compliance activities and stay tuned for further developments.

President Signs Executive Order on the Affordable Care Act

Contributed by Kelly Haab-Tallitsch, January 23, 2017

56033703 - words affordable care act  aca written on a paper.Shortly following his inauguration on Friday, President Trump signed an Executive Order affirming his intent to eliminate the Affordable Care Act (ACA). The executive order is not a repeal of the ACA and does not make any changes to the law or regulations thereunder, but rather addresses the actions of federal agencies in enforcing the existing law. The executive order directs the agencies responsible for overseeing ACA enforcement (Health and Human Services, Treasury Department, and Department of Labor) to, “take all actions consistent with the law to minimize the unwarranted economic and regulatory burden of the act” and “prepare to afford the States more flexibility and control to create a more open healthcare market.”

Specifically, the executive order directs the agencies to exercise the maximum discretion and authority available to them under the law to waive, defer, grant exemptions from or delay implementation of any provision of the ACA that imposes a cost, fee, tax or penalty.  It is unclear exactly how much discretion the agencies have with respect to many ACA provisions; however, this is a clear message that they have been instructed to identify ways to lessen the law’s impact during the interim period as lawmakers work towards an appeal.

What Does This Mean for Employers?

It’s too early to tell how or when employers will be impacted. The executive order did not actually change anything, but rather signaled the intent to make changes. Until further guidance is issued by the federal agencies, employers should continue compliance with all applicable ACA provisions. While the Trump administration appears committed to swift action on the ACA, we would not expect further information until the new heads of Health and Human Services, Treasury Department and the Department of Labor are in place.

We will continue to monitor developments on the ACA and provide additional information as it becomes available.

ACA Whistleblower Complaint Procedures

Contributed by Kelly Haab-Tallitsch, November 3, 2016

On October 11, 2016, the Occupational Safety and Health Administration (OSHA) issued the final rule creating procedures for handling whistleblower complaints under the Affordable Care Act (ACA).  The ACA prohibits employers from retaliating against employees who report alleged violations of the act’s health coverage reforms or who receives a premium subsidy or tax credit for purchasing individual health coverage through a state or federal exchange. A covered employer can receive a penalty if an employee receives a tax-credit or premium subsidy for coverage through an exchange. The final rule addresses the concern that the relationship between the employee’s receipt of a premium tax credit and the potential penalty imposed on an employer could create an incentive for an employer to retaliate against an employee.

whistleTo demonstrate unlawful retaliation under the ACA, an employee need only show that the protected activity was a contributing factor to an adverse employment decision—rather than the “but for” cause. An employer will then have to present “clear and convincing evidence” that it would have taken the same action even if the employee had not engaged in the protected activity.

Substantially similar to the interim rule on ACA whistleblower claims published in 2013, the final rule mirrors many of the provisions related to whistleblower protections under other statutes that OSHA enforces and includes procedures and time frames for employers and employees to appeal an OSHA decision.

Complaint Procedures

An employee must file a complaint within 180 days of the alleged retaliation. The complaint can be oral or written, made by telephone, in person or electronic means, and may be made in any language if the employee can’t file in English. Anyone can file a complaint on behalf of an individual, provided that individual agrees.

Once a complaint is submitted, OSHA must provide written notice to the employer, provide the employer and employee an opportunity to submit a response and meet with the investigator to present statements from witnesses, conduct an investigation, and issue notification of its findings. If OSHA finds reasonable cause to believe that retaliation has occurred, a preliminary order will be issued, which can include job reinstatement, lost wages, restoration of benefits, special damages (i.e. emotional distress) and attorneys’ fees and costs.

Either party may then request a hearing by a Department of Labor administrative law judge (ALJ) and an ALJ’s decision may be appealed to the department’s administrative review board.

Employer Action Steps

To reduce the risk of an ACA whistleblower claim, applicable large employers (as defined by the ACA) should:

  1. Ensure compliance obligations are adequately addressed;
  2. Identify ethics and legal compliance as a business priority;
  3. Implement and distribute a code of ethics that makes a commitment to compliance explicit;
  4. Include a well-publicized and effective internal complaint procedure; and
  5. Train supervisory staff! Make sure supervisors know what constitutes protected activity, retaliation, etc.

By taking the above steps, an employer can minimize chances employees will raise ACA whistleblowing claims and maximize chances that any such claims are raised and resolved internally.

BREAKING NEWS: Supreme Court Upholds Affordable Care Act Tax Credits

Contributed by Kelly Haab-Tallitsch

In a major decision announced earlier today, the Supreme Court upheld the tax credits under the Affordable Care Act (ACA) in states that have a federal health care exchange, affirming the 4th Circuit’s ruling in King v. Burwell.  The Court’s ruling confirms the legality of tax credits for the purchase of individual health coverage in the 37 states that have a health care exchange run by, or in partnership with, the federal government – including Illinois, Indiana, Wisconsin and Missouri.

At issue was the interpretation of language in Section 36B of the ACA authorizing individual tax credits for insurance purchased through an “exchange established by the state.”  Currently, only 13 states run their own exchanges, with the remaining 37 states using the federal exchange or a state-federal partnership exchange. Plaintiffs in King argued that an “exchange established by the state” did not include the federal exchange – an interpretation that would have made the tax credits illegal in 37 states.

Agreeing that the phrase “an exchange established by the state” was ambiguous, the Court looked to the context and structure of the statute to determine the meaning. Finding that language used elsewhere in the ACA indicated state and federal exchanges should be treated the same, the Court interpreted Section 36B to allow tax credits for insurance purchased on any health care exchange created under the ACA.

The Court further reasoned that interpreting the language to prohibit tax credits in states with a federal exchange would be incompatible with the rest of the law and that the tax credits are necessary for the ACA to function as Congress intended. Without individual tax credits two of the ACA’s three major reforms – the tax credits and the coverage requirements – would not apply. The Court further noted that certain other provisions would “make little sense” if tax credits were not available on the federal exchange.

What Does This Mean for Employers?

In affirming the individual tax credits in the 37 states with a federal exchange, the Court has indirectly upheld the employer penalties for failing to offer health coverage.  Penalties for not offering mandated coverage are only imposed on an employer if one or more employees receive a tax credit to purchase individual coverage on the exchange. Employers should continue to analyze their risk of penalty exposure and manage their benefit offerings accordingly.

Perhaps more importantly, the Court’s ruling in King v. Burwell further illustrates the staying power of the ACA and decreases the likelihood of relief for employers any time soon.

Contraceptive Mandate Accommodation Requirements Are Holding Strong Despite Recent Supreme Court Opinion

Contributed by Jamie Kauther

There have been very few if any health care policies as controversial as the Affordable Care Act (ACA).  One of its most talked about provisions, the contraception mandate, again made headlines this past month, especially here in the Seventh Circuit.  Unless you were living under a rock or enjoying a tropical vacation without Wi-Fi last July, you’ve heard of Burwell v. Hobby Lobby, 134 S. Ct. 2751 (2014), the Supreme Court decision that held corporations controlled by religious families cannot be required to pay for contraception coverage for their female workers, contrary to the contraception mandate found in the ACA.   This decision sparked the attention of the nation but, although lost in most of the media coverage, was a decision that applied to only a handful of employers.

Just last month, the Supreme Court revived the University of Notre Dame’s challenge to the contraceptive mandate accommodation under the ACA that applies to religious nonprofit organizations (RNO).  This accommodation to the customary mandate requires RNOs to tell the Health and Human Services Department in writing that they object to the mandate on religious grounds and their insurance provider must then provide the mandated contraception coverage.  In its February 2014 decision, Univ. of Notre Dame v. Sebelius, 743 F.3d 547 (7th Cir. 2014), the Seventh Circuit upheld the accommodation and denied Notre Dame’s argument that it was unenforceable.   However, just last month the Supreme Court vacated the decision and asked the Court to determine if the subsequent Hobby Lobby decision impacts the outcome.  The parties filed their respective position briefs on April 7th.  The government argued Hobby Lobby has no impact and the accommodation should remain, while faith-based Notre Dame argued it’s a substantial burden against religious beliefs and thus the prior decision must be reversed.

What does this mean for employers?  If you are not a closely held corporation controlled by a religious family (a very small group qualifies), or a RNO (albeit a much larger group), this means nothing.  If you are an RNO, it is important to remember your contraceptive mandate accommodation requirements are still intact.   The Supreme Court did not attack the Seventh Circuit’s decision, it did not waive the accommodation requirement for RNOs, and it did not extend Hobby Lobby to apply to any other employer group.   As such, there should be no change in policy or practice and there should be no expectation that a change is imminent as the Seventh Circuit is anticipated to affirm its prior ruling.