HR Webinar: The Affordable Care Act Turns 10 Years Old: Where to From Here?

Organize. Humanize. Maximize.
Happy Birthday, ACA
The Affordable Care Act Turns Ten Years Old
March 23, 2020
Bob Greene

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Today’s Speaker
Bob Greene currently serves as Senior HR Industry Analyst at Ascentis.
Bob’s 40 years in the human capital management industry have been spent
in practitioner, consultant and vendor/partner roles. As practitioner, he
managed payroll for a 5,000-person bank in New Jersey. As consultant, he
spent 8 years advising customers in HRMS, and payroll and benefits system
design as well as acquisition strategies. Bob also built a strategic HCM
advisory practice for Xcelicor (later acquired by Deloitte Consulting.)
As vendor/partner, he has had prominent roles in sales support, marketing
and product management at several companies and currently Ascentis. Bob
has been a Contributing Editor for IHRIM's Workforce Solutions Review
journal, for the past eight years, and for 2020 will be Co-Managing Editor.
His experience also includes two years as Adjunct Lecturer in HRIS at
Benedictine University in Lisle, Illinois. In addition to his 40 years of
experience, Bob also holds a BA in English from Rutgers University.
Bob Greene

Agenda
• Part I: The ACA: Basic Provisions
• Improving Health Plan Quality: New Minimum Plan Standards
• Ensuring Affordability and Availability: The Employer Mandate
• Employer Shared Responsibility Penalties
• Predictions for a post-ACA Healthcare System
• Part II: Changes Over the Past Ten Years
• A Series of Court Challenges
• Executive Orders and Their Impact
• Part III: Public Perceptions and Where to From Here
• The ACA Has Never Been More Popular
• The States Have Largely Signed On
• How Ascentis Can Help
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Disclaimer
• Legal advice
• A political opinion
This presentation is not:
Before Taking Any Actions
Before taking any actions on the information contained in
this or any other Ascentis presentation, employers should
review this material with their professional advisors.

Part I
11
The ACA:
Basic Provisions
2010 - 2018 2019 - ???
Mandates
1. Insurer (Quality)
2. Employer
3. Individual
Mandates
1. Insurer (Quality)
2. Employer

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Challenging the ACA: Texas v. United States
The ACA is Once Again Facing the Fight of its Life…
• If the ACA is repealed and not immediately replaced with any other legislation, it is worth remembering
some of what the law brought us and what the American health insurance system will lose:
• An end to annual reimbursement limits
• An end to lifetime reimbursement limits
• Elimination of pre-existing condition exclusions
• An end to gender-neutral premium pricing
• 10 minimum essential coverage provisions, including prescription drugs, maternity benefits, preventive services and substance abuse
treatment
• Parity for mental health benefits
• More than 60 distinct preventive care services which must be given to all health insurance enrollees without copayment, co-insurance or
having to meet any deductible.
• Children guaranteed coverage on parents’ policies to age 26
• Affordability limits applied to employee contributions for all ACA-compliant plans
• Minimum value applied to all policies (based on actuarial calculations of cost-sharing provisions)
• Medical loss ratio rebates, requiring a minimum percentage of premium revenue by insurers be spent on claims. These MLR rebates
have totaled $4.241 BILLION in premium REFUNDS in the first seven years they were law (2012-2018)
• Medicaid expansion by 36 states as of 01/01/2020, with three of those states (NE, UT, ID) adopting it in 2019 or 2020.

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Improving Health Plan Quality
Minimum Value (“MV”)
Minimum value is a calculation of the relative premiums (employer and employee)
and reimbursement rules (deductibles, copays, coinsurances):
• A health plan meets the minimum value standard if both of these apply:
• It’s designed to pay at least 60% of the total cost of medical services for a standard population.
• Its benefits include substantial coverage of physician and inpatient hospital services.
• The Centers for Medicare and Medicaid Services (“CMS”) publishes annual
revisions to a minimum value calculator that employers and other plan sponsors
can use to check whether the provisions of their plans meet minimum value
standards.
https://www.cms.gov/cciio/resources/regulations-and-guidance/index

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Minimum Essential Coverage (“MEC”)
The ten minimum essential health benefits all ACA-
compliant plans must offer include:
1) Prescription drugs
2) Pediatric services
3) Preventive and wellness services and chronic disease management
4) Emergency services
5) Hospitalization
6) Mental health and addiction services
7) Pregnancy, maternity and newborn care
8) Ambulatory patient services
9) Laboratory services
10) Rehabilitative and habilitative services and devices

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Medical Loss Ratio Rebates
Source: Kaiser Family Foundation, kff.org. Access here: https://www.kff.org/state-category/health-reform/medical-loss-ratios/
Medical Loss Ratio Rebates are a
feature of the ACA that guarantees
that insurer will meet certain
minimum benefit standards:
• The 80/20 Rule generally requires insurance
companies to spend at least 80% of the money
they take in from premiums on health care costs
and quality improvement activities. The other 20%
can go to administrative, overhead, and marketing
costs.
• Prior to the ACA it was routine for insurers to
return far less than 80% of premiums collected in
benefits to insureds.
• Total MLR rebates refunded to plan sponsors
and/or insured from 2012 through 2018 (latest
year for which payments were completed:
$4.241 billion

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The Employer Mandate
At the highest level, employers generally have four options:
Sponsor coverage
through a SHOP**
(for qualifying small
employers…)
Offer No
Coverage
• No penalties
• Small business
may be eligible for
tax credit (25 or
fewer employees
and average wage
not exceeding
$50,000)
• If large employer…
• Penalty of $173.331
per month for each
full-time employee
(minus first 30
employees)
Commercial
coverage
(that meets minimum
value and affordability
requirements…)
• No penalties
• Employees are not
eligible for
subsidized
Exchange coverage
Commercial
coverage
(that fails minimum
value and affordability
requirements…)
• If large employer…
• Penalty of $2601 per
month for each
employee receiving
tax credit/CSR*
through Exchange
*Cost Sharing Reduction **Small Business Health Options Program Exchange 1Original 2014 amount, indexed for inflation

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Effective for plan years beginning January 1, 2014, the Affordable Care Act specifies one
penalty if an applicable large employer (ALE) chooses not to offer health insurance to at least
95% of full-time employees (“pay”) and a different penalty if that ALE offers insurance but it
fails to meet specified coverage levels (“play”) for at least 95% of full-time employees:
PPACA §4980H(a)
Coverage Not Offered
PPACA §4980H(b)
Coverage Offered Doesn’t Meet
Specified Levels
• Triggered if at least one
employee receives tax credits
or cost-sharing reductions
through an Exchange
• $173.33/month1 times the total
number of full-time employees
(30 or more hours in a week)
less first 30
• $260.00/month1 times the total
number of full-time employees
who receive tax credits or cost-
sharing reductions through an
Exchange
• Safe harbor: Cannot exceed
penalty as calculated under
§4980H(a)
1Original 2014 amount, indexed for inflation

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Shared Responsibility: Am I an “Applicable Large Employer (ALE)” ?
Under the Affordable Care Act, an employer is considered an “applicable large
employer” if they employ an average of 50 full-time equivalencies over the course of
the preceding calendar year.
• So, for example, the measuring year for 2021 is 1/1/2020 through 12/31/2020.
• This is calculated as either full-time employees, or any combination of full-time and part-time employees that,
on an FTE basis, equals 50 or more.
• Full-time employees are defined as those employees averaging 30 hours per week or more.
• FTEs are calculated in a straightforward manner. The IRS-provided example is “an employer with 40 full-time
employees employed 30 or more hours per week on average, plus 20 half-time employees employed 15
hours per week on average meets the 50 full-time employee test.”

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Counting Employees:
…each month is counted separately, and then averaged (and fractions are
retained until the END of the computation.)
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Full-Time Employees 37 36 36 37 31 35 39 38 39 35 36 38
Subject Hours non FT 1740 1670 2250 1900 1773 1640 1922 1950 2077 1850 1373 1530 (Note 1)
FTE Conversion 14.50 13.92 18.75 15.83 14.78 13.67 16.02 16.25 17.31 15.42 11.44 12.75 (Note 2)
Total Employees 51.50 49.92 54.75 52.83 45.78 48.67 55.02 54.25 56.31 50.42 47.44 50.75 617.62
617.62/12 months = 51.47 employees
1. Count only paid hours. Only the first 120 hours per month for each employee must be counted.
2. Always divide the previous line item by 120 to obtain this result, regardless of the actual number
of days or working days there were in the month.
Retain fractions or decimals at this point in the calculation. Do your count on the same date each month.

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Employees and/or Hours You Can Exclude from this Calculation:
• The common law “employee” definition applies. Therefore, you can exclude:
• Leased employees
• Sole proprietors
• Partners in a partnership
• Owners of an LLC (if taxed as a partnership)
• 2% or greater S-Corporation shareholders
• All hours worked outside the United States may be excluded from this calculation.
• For “affiliated employers” (as defined under IRC §414 controlled ownership group standards), FTEs of all related entities
must be aggregated for the large employer test.
• Seasonal employees safe harbor: If an employer exceeds the 50 FTE count for 4 or fewer months in a year (and these
need NOT be consecutive months), and the only reason they exceeded that total was due to seasonal staff, then the
employer is NOT a large employer. Note that this is NOT limited to agricultural or retail employers.

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Affordability Monitoring
Reviewing the Affordability “Crazy Quilt:” Who Must Be Covered…
Relative Must Coverage Be
Offered?
Must it Pass an
Affordability Test?
Comments
Employee Yes Yes Single-Coverage Premium Comparison
Only (“9.5%”); comparison is to
lowest-cost eligible plan option
Spouse No1 No
Minor Children Yes No
Adult Children
(definition expanded by ACA to
age 26)
Yes No To 12/31/13: only if adult child’s employer doesn’t
offer coverage
From 1/1/14: whether or not adult child’s employer
offers coverage
Unmarried Domestic
Partners
No No However, if coverage is offered, benefits must be at
parity with spousal coverage
1 …an offer of coverage to an employee’s spouse is not required for purposes of section 4980H because section 4980H refers only to
dependents (and not spouses). [Proposed IRS Reg 138006-12, issued 12/28/2012]

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Determining Affordability: Three Little Safe Harbors
Coverage is “affordable” if no employee is required to pay more than 9.5% (original
amount, indexed, 9.78% for 2020) of his/her “household income” for self-only
coverage under the employer’s lowest-cost option that provides minimum value.
• This presents a problem! How does an employer know an employee’s “household income” (or
AGI or MAGI, for that matter?)
• Of course, employers don’t have this information. So the DOL provides for three alternative safe
harbors for “household income:”
• W-2 Income. The employee’s W-2 income (Box 1: Wages, Tips and Other Compensation)
for the current year. -OR-
• Monthly Rate of Pay. From the FIRST day of the plan year. For hourly employees, the
hourly rate of pay times 130. For salaried employees, the monthly salary. -OR-
• Federal Poverty Line. 100% of the FPL for an individual.
Federal
Poverty
Level
Stated
Monthly
Salary
W-2
Wages

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Determining Affordability: Comparing the Three Safe Harbors
W-2 Income Rate of Pay (Monthly)1 Federal Poverty Level1
Advantages Includes all hours worked or paid (e.g.,
paid leave, holidays, vacation)
NOT calculated on employee-
specific basis.
NOT calculated on employee-
specific basis.
Disadvantages • Excludes pre-tax contributions
(401k, Sec 125)
• Must be calculated on employee-
specific basis
• Employer won’t know permissible
amount until after the end of the
year
For hourly employees, the
employer can only multiply the
hourly rate of pay by 130
hours, even if the employee
works more than that in a
month
The maximum amount: for
employee-only coverage, the
maximum affordable premium
is the lowest of the three safe
harbor methods available.
Maximum Premium
Allowed2
$131.73/month (but could be less due
to pre-tax deductions or more due to
overtime pay)
$98.80/month $92.39 per month (for 2014)…
$99.75 per month (for 2019),
$101.79 per month (for 2020)
1 These methods are based on a single safe-harbor calculation for the lowest-paid employee.
2 For W-2 and Rate of Pay methods, this uses an apples-to-apples assumption of an hourly rate of $8.00

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Annual Benefit Limit Changes: 2019-2020
ACA-Related Indexed Dollar Amounts
ACA Affordability and ESRP Amounts 2020 2019
Out of pocket maximums
Self-only: $8,150
Any other: $16,300
Self-only: $7,900
Any other: $15,800
PCORI fee Phased Out
Phased Out
(WAS $2.45/pp for plan years
ending 9/30/19, due 7/31/20)
Transitional Reinsurance Fee Phased Out Phased Out
“Prior Year” FPL (for Affordability Safe Harbor) $12,490 $12,140
Affordability percentage 9.78% (went DOWN) 9.86%
Maximum self-only health plan contribution (FPL safe harbor) $101.79 $99.75
§4980H(a) – ESRP for failure to offer coverage ESRP (applied
on a monthly basis)
$2,570 ($214.17/month) $2,500 ($208.33/month)
§4980H(b) – ESRP for failure to offer affordable, minimum
value coverage (applied on a monthly basis)
$3,860 ($321.67/month) $3,750 ($312.50/month)

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Annual Benefit Limit Changes: 2019-2020
PPACA §4980H(a)
Coverage Not Offered to at Least
95% of Full-Time Employees
PPACA §4980H(b)
Coverage Offered Doesn’t Meet
Specified MEC/Affordability Levels
• 2015: $173.33/month
• 2016: $180.00/month
• 2017: $188.33/month
• 2018: $193.33/month
• 2019: $208.33/month
• 2020: $214.17/month times the
total number of full-time
employees (30 or more hours in
a week) less the first 30
• 2015: $260.00/month
• 2016: $270.00/month
• 2017: $282.50/month
• 2018: $290.00/month
• 2019: $312.50/month
• 2020: $321.67/month times the
number of F/T employees who
receive Premium Tax Credits
through an Exchange
Note: for RY2015/FY2016 ONLY, one-time transition relief applied: §4980H(a) penalties applied only if coverage
was not offered to at least 70% of full-time employees, and the penalty “carve-out” was increased from 30 to 80.
Overall penalty safe harbor:
Penalties as calculated under
§4980(H)(b) cannot exceed
total penalty as it would
have been calculated under
§4980(H)(a).

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What Would a Post-ACA Healthcare System Look Like?
Personal Bankruptcies
• Recent studies have found that 2/3 of all personal
bankruptcies are attributed to medical expenses.
• This is largely attributed to the fact that, unlike
other forms of debt, medical expenses are often
unexpected, involuntary, and large.
• The ACA has had the effect of reducing new
bankruptcy filings by 50% over the last 10 years.
Source: Consumer Reports. Access here:
https://www.consumerreports.org/personal-bankruptcy/how-the-aca-
drove-down-personal-bankruptcy/

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The Uninsured Rate in America: The Chart Says It All
Source: Kaiser Family Foundation, kff.org. Access here:
https://www.kff.org/uninsured/issue-brief/key-facts-about-the-uninsured-population/

Organize. Humanize. Maximize. 28
Health Insurance Premiums
Source: Kaiser Family Foundation, kff.org. Access here: https://www.kff.org/health-costs/report/2019-employer-health-benefits-survey/
Pre-ACA: The “Wild Wild West” ACA: Stabilization
The trends for employer-
provided health plan
premiums:
• Although the ACA was signed
into law in 2010, most of its
cost stabilization provisions
phased in over 2012 – 2014.
• So we can easily see the
impact on premiums of the
various provisions of the law:
five consecutive years of either
3% or 4% year-on-year
increases.

Part II
Changes Over the Last Ten Years

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Challenges to the ACA: A Brief History
Nine Tumultuous Years in Affordable Care Act Legislative and Judicial Review
March 23,
2010
The ACA (aka
“Obamacare”)
signed into
law.
June 28,
2012
SCOTUS
decides
NFIB v. Sebelius
(567 U.S. 519),
upholding the
Individual
Mandate under
Congressional
taxation power.
June 25,
2015
SCOTUS
decides King v.
Burwell
(573 U.S. 988),
upholding the
validity of
premium tax
credits in the federal
health exchange.
June 30,
2014
SCOTUS
decides Burwell v.
Hobby Lobby Stores
(573 U.S. 682),
limiting key ACA
provisions as
they apply to
“closely held
corporations.”
July 27,
2017
Sen. John McCain
offers “thumbs
down” decision on
so-called
“Skinny Repeal”
killing the closest of
54 votes over 4 years
by Congress
to repeal the ACA.
December 18,
2019
In Texas v. U.S.,
the 5th Circuit
Appeals Court
struck down the
Individual Mandate
and remanded the
remainder of the
ACA for
reconsideration.
December 22,
2017
The Tax Cuts &
Jobs Act, P.L.
115-97, signed
into law,
effectively
repealing the
Individual
Mandate under
the ACA.

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Challenging the ACA: NFIB v. Sebelius
National Federation of Independent Business v. Sebelius 567 U.S. 519 (2012)
Plaintiff/Appellant: National Federation of Independent Business
Defendant/Appellee: Kathleen Sebelius, Secretary of HHS
• Basis of the challenge: the ACA’s mandatory health insurance "individual mandate"—the
provision of IRC § 5000A imposing a "shared responsibility penalty" on nearly all Americans
who fail to purchase health insurance—was outside the power of Congress.
• Opinion delivered by CJ John Roberts. Holding of a 5-4 divided Court:
• The individual mandate provision of the ACA functions constitutionally as a tax, and is therefore a valid exercise
of Congress's taxing power.
• Congress exceeded its authority under the Spending Clause of the Constitution by coercing states into a
transformative change in their Medicaid programs, by threatening to revoke all of their Medicaid funding if they
did not participate in the Medicaid expansion, which would have an excessive impact on a state's budget.
• What the holding doesn’t say: many behind-the-scenes reports at the time indicated that
Chief Justice Roberts was siding with the four Conservatives that the individual mandate, and
therefore the ACA in its entirely, was unconstitutional, but late in deliberations, and perhaps
with a view toward what history might have to say about “the Roberts Court,” he switched his
vote to align with the liberals, and uphold the constitutionality of the ACA.

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Challenging the ACA: Burwell v. Hobby Lobby Stores
Burwell v. Hobby Lobby Stores, Inc. 573 U.S. 682 (2014)
Plaintiff/Appellant: Sylvia Burwell, Secretary of HHS
Defendant/Appellee: Hobby Lobby Stores, Inc.
• Basis of the challenge: the ACA’s mandate for employers, as part of the minimum essential
coverage of their ACA-compliant health plans, to cover certain contraceptives for female
employees, was in conflict with both the Religious Freedom Restoration Act (P.L. 103-141,
1993) and the Free Exercise of Religion Clause.
• Opinion delivered by AJ Samuel Alito. Holding of a 5-4 divided Court:
• The ACA’s mandate for provision of certain contraceptive drugs/devices violates the religious freedom of closely
held for-profit corporations to refuse to do so, because it is not the least restrictive means of furthering the
government’s interest in achieving the end result.
• The Court failed to reach a determination on Hobby Lobby’s claim that the rule also violated the Free Exercise of
Religion Clause.
• This was the first Supreme Court case in which a for-profit corporation was found to possess religious beliefs
(i.e., not a church or church-related organization.)

33
Challenging the ACA: King v. Burwell
King v. Burwell 576 U.S. 988 (2015)
Plaintiff/Appellant: Sylvia Burwell, Secretary of HHS
Defendant/Appellee: David M King, a citizen of Virginia
• Basis of the challenge: the ACA’s provision of premium tax credits to purchase health
insurance, to certain individuals based on income, was valid only in states with state-operated
exchanges, and the government’s decision to award these to insurance purchasers in states
served only by the federal exchange violated the clear letter of the ACA.
• Opinion delivered by CJ John Roberts. Holding of a 6-3 divided Court:
• Section 36B of the ACA provides for subsidies under both federally run and state-run exchanges. The wording
"...established by the State" was superfluous when read within "the broader structure of the Act".
• Interesting factoid: multiple investigations by various media outlets revealed that each of the
four named original plaintiffs could have lacked standing to bring the case at all: two, as
Vietnam Vets, received free healthcare from the VA, and two others provided questionable
background information about their residence and/or income that might have lowered their
premiums or exempted them from the Individual Mandate entirely.

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Texas v. United States Civil Action No. 4:18-cv-00167-O (ND TX 12/14/2018)
Plaintiff/Appellant: 18 Republican-led states, 2 individuals, Federal gov’t*
Defendant/Appellee: 21 Democratic-led states, House of Representatives**
• Basis of the challenge: once the federal government voided the Individual Mandate penalty as
part of the TCJA’17, the ACA can no longer stand as a constitutional law.
• Position of the defenders: even if the individual mandate is found unconstitutional (in direct
contravention of the Supreme Court’s previous decision in NFIB v. Sebelius), it is severable
from the ACA as a whole and the ACA itself should be ruled constitutional.
* In a move rarely seen in federal appeals court (or higher) situations, the federal government,
under HHS Secretary Azar, “switched sides” in the middle of the legislative journey, joining the
plaintiff states in advocating for the complete abolition of the ACA.
** Proving that few controversies are more completely political than the ACA, two states withdrew
from their previous anti-ACA stance mid-litigation when their state governments turned over in the
mid-term election: Maine and Wisconsin.

35
Alignment of the Parties in Texas v. United States
https://www.kff.org/health-reform/issue-brief/explaining-texas-v-u-s-a-guide-to-the-5th-circuit-appeal-in-the-case-challenging-the-aca/

36
States’ Positions in Texas v. United States

37
Timeline: Key Dates in Texas v. United States
https://www.kff.org/health-reform/issue-brief/explaining-texas-v-u-s-a-guide-to-the-case-challenging-the-aca/

38
Legal Questions and Potential Outcomes in Texas v. United States
Decisions
made by
the Fifth
Circuit Court
of Appeals

39
Texas v. United States: Legal Maneuvering on Appeal
• A three-judge panel of the Fifth Circuit ruled (2-1), on December 18, 2019:
• …that the Individual Mandate was unconstitutional
• …that removing that provision from the law, the case needed to be remanded to the US District Court to
reconsider the constitutionality of the remainder of the law.
• On January 31, 2020, a closely divided Fifth Circuit declined to re-hear the case en banc.
• Defendants/Interveners California et. al., appealed to the US Supreme Court in February and
requested expedited review.
• Expedited review was denied but the Supreme Court accepted the case (certiorari granted) on
March 2, 2020, for their 2020-21 term.
• Opening brief is due to SCOTUS by April 16, 2020.
• Answering brief is due to SCOTUS by May 18, 2020.
• Reply brief is due to SCOTUS by June 17, 2020.
• Hearing before SCOTUS is expected as early as October, 2020. Decision unlikely before June, 2021.
Sources: Kaiser Family Foundation (kff.org). Access here:
https://www.kff.org/health-reform/issue-brief/explaining-texas-v-u-s-a-guide-to-the-case-challenging-the-aca/

40
Possible Outcomes Post-SCOTUS Review
• The Supreme Court will consider three questions:
• Whether Texas and the individual plaintiffs have standing to bring the lawsuit to challenge the individual mandate
• Whether the Tax Cuts & Jobs Act rendered the individual mandate unconstitutional
• If the mandate is unconstitutional, whether the rest of the ACA can survive.
• While it’s almost impossible to predict with any certainty what SCOTUS will do in any case,
there are four most likely results based on the trial/appeal records and the issues presented:
• If SCOTUS decides that Texas and the individual plaintiffs do not have standing to bring this case, the ACA as it exists today
would continue largely unchanged
• If SCOTUS finds the individual mandate unconstitutional (effectively reversing their own decision from 2012) and invalidates only
that provision, the ACA will survive much as it is today, but without an individual mandate
• If SCOTUS invalidates both the individual mandate and the provision requiring pre-existing condition protections, then the
Medicaid expansion and premium subsidies provisions will survive, but it will be up to each state whether to restore pre-existing
condition protections
• If SCOTUS decides that all or most of the ACA must be overturned, the impact would be a total sea change in the health
insurance infrastructure in this country.
Sources: Kaiser Family Foundation (kff.org). Access here:
https://www.kff.org/health-reform/fact-sheet/potential-impact-of-texas-v-u-s-decision-on-key-provisions-of-the-affordable-care-act/

41
Meanwhile, Over in the Executive Branch…
The Administration took a “six-shooter” approach:
I. At the end of 2016, the Transitional
Reinsurance Program ended (as
scheduled) and of course, was not
extended by the new Administration.
II. In October, 2017, the Administration
retroactively canceled $7 billion in
Cost-Sharing Reduction payments owed
to health insurance companies.
III. In December, 2017, (as part of the Tax
Cuts and Jobs Act’17), the Individual Mandate
was repealed, effective 1/1/2019.
IV. In June, 2018, the Administration issued
final enabling rules around association
health plans (“AHPs”).
V. In July, 2018, the Administration canceled
another $10.4 billion in retroactive Risk
Adjustment payments to health insurers
intended to reimburse excess claims payment
in 2017.
VI. In August, 2018, the Administration
expanded the scope of short-term health plans
(“STLDIs”) from a maximum of 90 days
coverage, to a maximum of 364 days coverage.
VII. EXTRA BULLET: In October, 2018, the Administration expanded the scope of Health Reimbursement Accounts, creating
“excepted benefit HRAs” (EBHRAs), with annual funding per individual up to $1,800 and specific approval to be used to reimburse
employees so that they can pay premiums for individual plans not meeting ACA standards (like STLDIs).

42
New Options for Health Insurance
Association Health Plans
• AHPs are exempt from various ACA quality guarantees:
• They need not meet minimum actuarial value standards
• They need not meet minimum essential coverage standards
• They can re-introduce gender-biased premium pricing
• They can require underwriting approval for insureds, and
• They can discriminate in premium-setting – not by individual, but by trade and/or
location (e.g., one rate for single coverage for pipefitters in Louisiana but a different
rate for electricians in Mississippi).
Association Health Plans (AHP) and Short-Term Limited Duration Insurance (STLDI)

43
• Some caveats about AHPs:
• In 2018, the Administration issued a final rule clearing the way for so-called “Pathway 2” AHPs.
• Traditional, “bona fide,” or Pathway 1, AHPs, had to have a single plan at the Association level.
• With the new 2018 rule, Pathway 2 AHPs could be formed by a group of employers who
assembled for the express purpose of purchasing health insurance, and merely needed a
“commonality of interest”, such as a shared location. Members didn’t even need to be in the
same industry.
• Shortly after the new rules were announced, the state of New York filed suit to stop the new rules
from taking effect, claiming they impermissibly expanded the definition of an “employer” under
ERISA. The case is awaiting a decision by the Court of Appeals for the DC Circuit.
• Employers should bear in mind, in the current political climate, that a turnover of the White House to
“the other political party” in 2020 could easily result in the complete rescission of the Pathway 2 AHP
expansion, in the event of a White House “flip”.
• In this case, employers could see their new AHP plans “up-ended” (or significantly redefined and/or
restricted) within a year or two of their inception.

44
Source: Mercer. Access here:
https://www.mercer.com/our-thinking/law-and-policy-group/more-states-approve-pathway-association-health-plans.html

45
Short-Term Limited Duration Insurance
• With regard to STLDIs, the current Administration expanded coverage rules from a duration of
90 days or less, to a duration of 364 days or less (with the option for renewal of the plans for
a total of 36 months).
• STLDIs are also designed to avoid key ACA quality guarantees:
• They allow pre-existing conditions exclusions
• They need not meet minimum essential coverage standards (of the ACA’s 10 “Essential Health Benefits”)
• They can bring back annual and lifetime reimbursement limits.
• A recent study of currently available STLDI plans by kff.org found that:
• …only 29% of plans cover outpatient prescription drugs,
• …38% of plans cover mental health or substance abuse, and
• …0% of plans – not a single plan! – covered maternity benefits.
• In fact, the state of California found these exclusions to be so egregious that they termed
STLDIs “junk insurance” and banned their sale within the state effective January 1, 2019 (CA.
S.B. 910). NY and NJ have followed suit with outright bans, and MD, OR, VT and WA have
re-imposed 90 day limits to coverage. ND makes the maximum back-to-back coverage
period 12 months, rather than the federal rule of 36 months.

46
Financing the New Non-ACA Compliant Plan Options
• By way of background, Health Reimbursement Accounts have been around for a long
time but arguably had been losing popularity in recent years, to flexible spending
accounts (FSAs) and especially to health savings accounts (HSAs).
• Furthermore, IRS Notice 2013-54 was a “nail in the coffin” for standalone HRAs, also
known as Employer Payment Plans, under which, prior to the ACA becoming law,
employers offered reimbursements to employees for the cost of individual insurance
and/or other health care expenses.
• Notice 2013-54 clarified that HRAs were, in fact, group health plans subject to ACA reforms.
• They therefore did not satisfy the employer mandate, because they failed to provide minimum value or
minimum essential coverage.
• Indeed, except for some transition relief for small-group employers provided by IRS Notice 2015-17, these
HRAs provided as standalone plans, became subject to ACA §4980D’s excise tax of $100 per day
per employee (or $36,500 per year, per employee – a level of statutory penalty that no employer
would tolerate).

47
• Enter…the “Excepted Benefit HRA” (or “EBHRA”).
• The Excepted-Benefit HRA proposal released jointly by the Departments of Treasury, Labor,
and HHS on October 23, 2018 sought to restore HRAs, under certain specific
circumstances, as a plan funding mechanism for small and large group employers, and this
in turn would make it easier for employees to choose STLDIs, for example, over other
coverage.
• The EBHRA rules are currently expected to take effect January 1, 2020.
• Final regulations on these new plans were issued jointly by IRS, DOL and HHS on June 20, 2019.
• EBHRAs are available to any size company, and must be offered alongside group coverage.
• Funds can roll over year to year; the rollover amounts do not count against next year contribution limits.
• The annual employer contribution limit per employee is $1,800 (indexed annually to the CPI).
• The EBHRA must be offered to all employees on the same terms.
• Employees may enroll in the EBHRA even if they decline group coverage from the employer.
Excepted Benefit HRAs

48
The following are the requirements for an HRA to qualify as an EBHRA:
1) The employer must offer other, non-individual account-based medical coverage to the employees.
Note, however, that there is no requirement that even a single employee actually enroll in this predicate
plan.
2) The EBHRA may be used to reimburse IRS-approved medical expenses and premiums or
contributions for COBRA, excepted benefit health coverage (e.g., dental and vision), or STLDI,
standalone dental, vision, and long-term care plans, but may not be used to reimburse premiums or
contributions for other medical coverage (such as Medicare Parts B or D premiums, Association Health
Plan or individual Exchange coverage. But note that a separate Individual Coverage Heath
Reimbursement Account, or ICHRA, also developed in these same regulations, but operating under
different rules, DOES allow for HRA reimbursement of Exchange coverage premiums, and is available
to employers of any size.)
3) The EBHRA must be made available on a uniform basis to all similarly situated employees, as
defined in existing HIPAA nondiscrimination rules (e., groups that are based on a bona fide
employment-based classification such as full-time/part-time, occupation, union status, geographic
distinction, length of service, or date of hire).
Excepted Benefit HRAs

49
• And then there’s…the “Individual Coverage HRA” (or “ICHRA”).
• The Individual Coverage HRA proposal was released along with the design of the EBHRA,
as a plan funding mechanism for employers to offer more flexibility in terms of design, and
employer healthcare spend.
• The ICHRA rules are currently expected to take effect January 1, 2020.
• Final regulations on these new plans were issued jointly by IRS, DOL and HHS on June 20, 2019.
• EBHRAs are available to any size company, and CANNOT be offered if the employer offers group coverage
to the same class of employees.
• Funds can roll over year to year; OR the employer can zero out the account at year-end – leftover funds stay
with the employer.
• There are no minimum or maximum contribution limits per employee per year.
• ICHRAs, instead of group insurance, can meet the employer mandate, IF the offer is affordable as defined
within the ACA, and meets minimum value standards.
• The plans are designed to be offered to varying classes of employees, and “mix and match” with group
coverage for other classes. There are 11 classes total; see the regulations for more information.
Individual Coverage HRAs

50
The following are the requirements for an HRA to qualify as an ICHRA:
1) The employer must NOT offer other, non-individual account-based medical coverage (i.e., group
coverage) to employees of the same “class”.
2) Employees in the ICHRA must enroll in a qualified individual health plan that meets minimum essential
coverage (e.g., Exchange coverage, or Medicare Parts A/B or C.)
3) The ICHRA may be used to reimburse IRS-approved medical expenses and premiums or contributions
for their individual coverage. NOTE that plans must be designed initially to offer reimbursement of premiums
only, or premiums plus expenses.
4) If an employee is named on their spouse’s group coverage, they may not participate in an ICHRA.
5) Employees participating in an ICHRA may not receive the Premium Tax Credit otherwise available to
them within the Exchange.
Individual Coverage HRAs

51
• Finally, we have…the “Qualified Small Employer HRA” (or “QSEHRA”).
• This reimbursement arrangement has been around since 2016.
• QSEHRAs are available only to employers of fewer than 50 full-time employees.
• They were designed to help small employers populated (predominantly) by professionals earning in excess of
Premium Tax Credit income limits (~$50,000).
• Unused funds carry over from month to month; however at year-end, leftover funds stay with the employer.
• The annual employer contribution limit is $5,150 per single employee, and $10,450 per employee with a
family (for 2019).
• Starting in 2020, there will be a 60-day special enrollment period for QSEHRAs, this was not the case in
2019.
• QSEHRAs may NOT be offered if the employer offers any medical, dental or vision group insurance.
• Must be offered to all full-time staff equally, but part-time, seasonal and employees under age 26 may be
excluded at the employers’ option.
• QSEHRA account dollars offset the Premium Tax Credit for which the employee might otherwise be eligible,
on a dollar for dollar basis.
Qualified Small Employer HRAs

52
Hacking Your Way Through the New HRA “Jungle”
Source: I highly recommend Take Command Health’s excellent HRA comparison chart.
Access here: https://www.takecommandhealth.com/blog/hra-comparison-chart-qsehra-ichra-ebhra

Part III
Public Perception
And Where to From Here

ACA Popularity: Public Polling
54
Source: Kaiser Family Foundation; kff.org. Access here:
https://www.kff.org/interactive/kff-health-tracking-poll-the-publics-views-on-the-aca/#?response=Favorable--Unfavorable&aRange=all&total

ACA Popularity: Public Polling
55
Source: Kaiser Family Foundation; kff.org. Access here:
https://www.kff.org/health-reform/poll-finding/6-charts-about-public-opinion-on-the-affordable-care-act/
Fun fact:
The Individual Mandate
needed to pay for all
these great provisions
has always polled in a
range of 31-41%
approval

ACA Popularity: Medicaid Expansion
56
Source: healthinsurance.org. Access here: https://www.healthinsurance.org/medicaid/

ACA Popularity: Medicaid Expansion
57
Source: healthinsurance.org. Access here:
https://www.healthinsurance.org/medicaid/
Medicaid Expansion
• Only a handful of states expanded Medicaid in 2012
when the opportunity first presented itself under the
ACA.
• The number of states opting in to the expansion has
continually grown, often by voter initiative where the
state government steadfastly opted out:
• By mid-2019, that number had grown to 33 states.
• Maine and Virginia (both on the basis of grass-roots
voter initiatives) expanded in 2019.
• Utah, Idaho and Nebraska voted expansion in 2018,
with full participation to take effect during 2020.
• The 14 states which continue to opt out as of this
writing, are refusing a collective $305 billion in
federal funding for their state Medicaid programs.

58
Questions?

59
How Ascentis HR Can Help
Ascentis allows you to focus on the bigger picture with integrated
HR software. We provide real-time data, software configuration to
meet your needs, and the ability to track employee records through
the entire employee life cycle.
• Employee and manager self-service for accessing forms and
policies of all kinds
• “Carrier Connection” Electronic Data Interchange for
communication of plan changes to carriers and wellness partner(s)
• Part-time and variable hour analysis to determine employee
enrollment eligibility
• Affordability calculators based on all three IRS-approved safe
harbors
• Annual 1094-c/1095-c reporting to both employees and the IRS
(via the IRS XML reporting system)
Recruiting &
Onboarding
Talent
Management
HR &
Benefits
Payroll
Time &
Attendance
Ascentis

60
Learn More
If you are interested
in Ascentis HR, or our other HR technology like Payroll, Time, Talent,
Recruiting, please indicate your interest if you haven’t done so already with
the following poll.

61
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63
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