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The Battle Update: What is going on with the ACA?

Good morning, Ladies and Gentlemen. Welcome to the People Processes podcast, where we dive deep into the tools, laws and yes processes that you need to know in order to scale and grow your organization. My name is Rhamy Alejeal, I’m the CEO of People Processes and I’m excited to have you here.

We help organizations all across the United States streamline, optimize, implement, and revolutionize their HR operations. We’ve helped hundreds of companies and thousands of HR leaders across the world get their people processes right. Today we’re doing a little update on what the heck is going on with the Affordable Care Act. Things are changing. Before we go, I want to take a quick second to ask you to please subscribe to our podcast. It makes a huge difference. You can find us on iTunes, Google podcasts, Spotify, Stitcher, any podcast or you like. You can also subscribe on which gives you some subscriber-only content exclusive updates. We really appreciate that.

So let’s dive into this battle over the Affordable Care Act. The fate of the 2010 Affordable Care Act, also known as “Obamacare”, including the many provisions affecting employers, such as the employer Mandate to provide health coverage – remains in limbo. A three-judge panel of the Fifth Circuit Court of Appeals has upheld a 2018 district court decision that the law’s individual responsibility provision, the individual mandate, requiring individuals to maintain health coverage violates the U S Constitution. However, unlike the lower court, the Fifth Court did not automatically stripe down the remainder of the law. 

In a 2012 decision, the U S Supreme Court held that the ACA’s individual mandate was a constitutional exercise of Congress’s power to levy and collect taxes. This was a big deal. It was huge news. It’s a National Foundation of Independent Businesses versus Sabellius. If you ever want to look up the case exactly.I have a link on our website, 

However, the 2017 Tax Cuts and Jobs Act, the Trump Tax Plan from 2017, effectively eliminated the individual mandate. It reduced the penalty for failure to maintain health coverage to zero beginning in 2019. That made a huge difference because now based on that change, Texas district court concluded that the individual mandate is no longer part of a tax. It no longer represents an exercise of Congress’s taxing powers and is therefore unconstitutional. Remember, it was only approved under their ability to tax. The court held that the individual mandate is “essential to” and “inseverable” from the other provisions of the ACA rendering those provisions unconstitutional as well. The district court did not issue an injunction barring enforcement of the ACA. Instead, they stayed its ruling pending a decision by an appeal of the Fiscal Fifth Circuit Court.

So this is important to understand. The court found that the law is not going to work, but they didn’t issue an injunction. So that means that if you are an employer, it’s February, you need to do your 1095s, 1094s. The ACA mandate is still in effect. It went up to the Fifth Circuit Court and in their new decision, they agreed that the individual mandate is unconstitutional because “it can no longer be read as a tax and there is no other constitutional provision that justifies this exercise of congressional power.” However, the Appeals Court did not accept the district court’s decision. That the demise of that one part of the law of the individual mandate rendered the entire law invalid. Instead, the Appeals Court sent the case back to the district court to “explain with precision” how the remaining provisions of the ACA “rise or fall on the constitutionality of the individual mandate.”

“It may still be”, said the court, “that none of the ACA is severable from the individual mandate even after this inquiry is concluded. It may be that all of the ACA is severable from the individual mandate. It may also be that some of the ACAis severable from the mandate, and some is not. But this is no small thing for unelected life-tenured judges to declare duly enacted legislation passed by the elected representatives of American people unconstitutional. The rule of law demands a careful, precise explanation of whether the provisions of the ACA are affected by the unconstitutionality of the individual mandate as it exists today.” Moreover, finally, the district court is determined whether the final decision should apply across the board nationwide or only to the 18 Republican Line states that actually started the lawsuits. So as we go to press right now as we write about this, a group of 21 Democratic Led States and the U S House of Representatives have petitioned the Supreme Court for an expedited review of the Fifth Circuit decision citing the paralyzing uncertainty that now hangs over the ACA.

The links to those, that’s the U S House of Representatives versus the State of Texas, et al. There’s a couple of different lawsuits going on around that. Basically, the only courts that have ruled, have ruled that the individual mandate is gone and that’s good. It’s not part of the taxing power. If the individual mandate is gone, one court ruled that the whole law has to go. There Superior court said, “We don’t know that that’s the case. Please explain why.” And that’s where we’re at now. It’s going to go back down to that district court and they’re going to have to give a good explanation why. Then the Appeals Court will decide whether that’s correct and at any point along the way the Supreme Court could reach down and pull it up as they’ve been petitioned by the House of Representatives to do. That’s your update on the ACA.

Can you take away file your 1095s? You’ve got to do it this year. You’re still under the mandate. We don’t know, maybe mid year this will all get figured out and there won’t be the ACA anymore, in which case, those of you who are offering major medical just to comply with the law won’t have to anymore. But for those of you who are in that position, don’t stop right now. File your 1095s for 2019 because if the case goes the other way, penalties are outrageously huge. So keep your insurance, make sure you’re complying with the law, pay your people to file their returns. And we’ll see how this plays out over 2020. Thank you so much for listening. Again, my name is Rhamy Alejeal and I just love having you guys tune in. Reach out to us on social media, Twitter, Facebook, Instagram. We’re always there at People Processes. I’d love to hear from you. You can also reach me on LinkedIn at Rhamy Alejeal. Thank you for listening. It’s time for you to go out there, have a great day, and get your work done.

Reference Links : 132 S. Ct. 2566 (2012) , I.R.C. §5000(c)

About the author, Rhamy

Rhamy grew up watching and working with his mother and grandmother in the senior insurance market. This familiarity with the struggles faced by people trying to navigate the incredibly complicated and heavily regulated healthcare market led him to start Poplar Financial while working on his degree at the University of Memphis. After completing his MBA and Bachelors in Finance and Economics, Rhamy guided Poplar Financial through the disruptive opportunity that is the Affordable Care Act. Since then Poplar Financial has received numerous awards from major insurance carriers and has completed its fourth year in a row of doubling in size. Now his team focuses on the processes around human resources and specializes in providing companies with between 20 and 1000 employees with the payroll, benefits, and HR needs.

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