“King” of the Road

July 6, 2015

Authored by: Chris Rylands and Lisa Van Fleet

ACAIn Roger Miller’s 1964 hit by the above name, he tells the tale of “a man of means by no means,” a man just scraping to get by. While he may not have a phone, a pool, pets, or cigarettes (and really, what does he need that last item for anyway?), after the Supreme Court’s 6-3 decision on June 25, however, such a man might be able to secure a premium tax credit to help pay for health insurance (yes, we realize he’d probably be Medicaid eligible, but just work with us here).

But what does the ruling mean for employers? At first, it might appear that it doesn’t mean very much; life under the Affordable Care Act will continue to move along much as it has for the last few years. That’s basically true, but there are some points to consider:

  1. This solidifies that the employer “play or pay” mandate is now effective nationwide. Because an employee must receive a premium tax credit to trigger the penalty, a decision the other way would have rendered the mandate ineffective in states with federal exchanges.
  2. For employers perhaps continuing to adopt a “wait and see” (or “ostrich,” depending on your point of view) approach to ACA implementation, the truth is that you’re already late. But given this decision, now is the time to start, if you haven’t already, getting your offers of coverage and reporting requirements in a row.
  3. This isn’t changing without legislation from Congress (and, really, what’s the likelihood of that in this political climate?). The Supreme Court’s decision basically said that Congress clearly intended for subsidies to be available for policies purchased through federal exchanges (more on that below). The Supreme Court could have followed the reasoning of one of the lower courts and said that the statute was ambiguous and the IRS’s interpretation was reasonable so it would be upheld. However, had they followed that analysis, it could have theoretically left the door open for the next administration to change the rule and say that subsidies were only available through State-run exchanges (the likelihood of that is another matter). By ruling the way they did, the Court basically left it up to Congress to change the law, if they want it changed.

That last piece of the analysis is interesting because, despite ruling for the government, the Chief Justice, in the majority opinion, took Congress to task on how the law was written. Specifically, the opinion says, “The Affordable Care Act contains more than a few examples of inartful drafting” and, “the Act does not reflect the type of care and deliberation that one might expect of such significant legislation.” For those of us who deal with this law frequently, neither of those statements is a surprise. And yet, despite this apparent lack of artful, thoughtful drafting, the Court nevertheless was able to discern a clear enough Congressional intent to reach its result. To us, it seems like an argument only a lawyer could love.