ACA Update: It Ain’t Over Till It’s Over

What an interesting few weeks it’s been on the healthcare front.

First, joint guidance from the DOL, HHS, and IRS issued in June authorized “Individual Insurance HRAs” beginning in 2020. Under this new rule, employers of any size will have the option of using a health reimbursement arrangement to assist employees in paying for coverage they purchase on the healthcare exchanges. This is a complete regulatory reversal from guidance that was issued just a few years ago that imposed a $100 per day per employee penalty on an employer who set this exact plan up.

Interestingly, the regulations provide the framework for establishing this benefit, but skip two very important issues: how can an employer subject to the ACA’s employer mandate comply with the mandate using this approach, and how does an employer stay compliant with the IRS’ non-discrimination rules at the same time? The Administration cannot just regulate around the rules laid out by Congress, so until those issues are resolved, this approach remains an iffy, if intriguing, proposition.

A couple of weeks later, President Trump issued a new executive order with a variety of directives relating to price transparency in the healthcare space. Included in this executive order is another rule change. This time it’s related to HSAs, which would allow certain maintenance drugs to be considered “preventive” and, therefore, allow them to be covered via copay before the HSA deductible is met. For anyone like me who’s on maintenance meds, this certainly would be a welcome development. However, an executive order isn’t a regulation or law, so this is also a “wait and see” scenario.

And then, we have today’s development (for the record, July 9th). You may recall a judge in the state of Texas ruled the ACA was unconstitutional and needed to be eliminated in its entirety. It was based on the argument that the reduction of the individual mandate penalty to $0 meant the 2012 Supreme Court ruling upholding the ACA was no longer valid. Most people, including me, viewed this ruling skeptically. The legal argument was somewhat weak, and how could just one person invalidate years of work, billions of dollars spent by the government, insurance carriers, employers, and individuals, and throw out thousands of pages of regulations?

Well, today the oral arguments on the first appeal of this ruling were heard. Initial reports indicate two of the three judges are potentially agreeing with the unconstitutional argument. We won’t know their final ruling for weeks, of course, and whatever side loses this case is going to appeal the ruling to the Supreme Court. But the mere fact it’s even possible another appeal to uphold the ACA is going to be necessary is the real news. The Supreme Court of 2019 is not the Supreme Court of 2012. That could have very interesting consequences indeed.

For now, of course, it’s business as usual with respect to the ACA, and you should plan accordingly. However, it’s time once again to keep an eye on what’s going on. As always, focus on what really happens, not the commentary. We’ll keep you updated as developments happen.