ACA Ruling Signifies Relief for Employers

But future expansions of the law could have plan sponsors reconsidering their benefits offerings, experts say.

The Supreme Court has knocked out a Republican effort to overturn the Patient Protection and Affordable Care Act (ACA) for the third time since 2012.

The 7-2 majority vote squashed the most recent argument to come before the Supreme Court in the ACA litigation trilogy, securing the health law and evading potentially months of plan reversals. Technically, the final decision came down to a basic issue: The court ruled that the Republican-led states challenging the law had not shown that they were harmed by the elimination of the requirement that Americans obtain insurance or pay a penalty, and thus they had no standing to sue.

“The ruling brings an end to the most recent challenge to the ACA, and, while the full effects of any given Supreme Court opinion are often unknown for some time, that is not the case here,” George Katsoudas, senior vice president, compliance counsel, Arthur J. Gallagher & Co., tells PLANSPONSOR. “This ruling means that the ACA remains the law of the land.”

On the policy side, President Joe Biden, his administration and the Senate majority leadership have stated their interest in further building and expanding the ACA, notes Kathryn Bakich, national director of health care compliance and senior vice president at Segal, a human resources (HR) and employee benefits consulting firm. The Biden administration took its first step into health care legislation with the American Rescue Plan Act (ARPA), which extended eligibility for ACA health insurance subsidies to those purchasing their own coverage and lowered health insurance premiums for qualified lower- and middle-income families. 

The Biden administration additionally has said it would like to change the firewall between employee contributions and exchanges, to allow and expand subsidies for those who already own employer health plan coverage, Bakich adds. This could potentially wean employees off any existing health insurance coverage, if they find the public option is a better fit for them. “This is something that we must watch carefully because employer coverage is still good coverage,” Bakich says.

Therefore, she says, it’s important for employers to make sure their benefit offerings are up-to-date and remain competitive down the line.

“In the long term, we will likely continue to see employer strategies and benefit offerings evolve to deal with not only the demographic changes and needs of their workforce but, also, to deal with the legislative challenges that they face,” Katsoudas says.

Ahead of the ACA’s ruling, Kim Buckey, vice president of client services at DirectPath, a benefits education, enrollment and health care transparency firm, had warned plan sponsors about what could happen if the ACA was overturned. Now that a decision has been made, she says, and with potential legislative updates looming in the future, employers should rethink what offerings they’ll include for this year’s open enrollment period and what they would like to implement down the line, including health care price transparency and prescription drug coverage.

“I think there was some hesitancy among plan sponsors to make substantive changes to their plans with the fate of the ACA up in the air,” she adds. “Now that this has been resolved, we may see some interesting new plan designs emerging.”