Is the ACA Unconstitutional?

John Owens | 12-19-2018

So, as you may have heard, the Affordable Care Act (ACA) has been ruled unconstitutional. Now what?

That’s a great question.

For most business owners with 50 or more full-time employees, for better or worse, the Affordable Care Act has been an accepted fact of life since becoming fully phased-in in 2014. For most business owners, the process of compliance and reporting has become by now a consistent, and likely time-consuming, part of doing business.

Then on Friday, December 14th, U.S. District Judge Reed O’Connor ruled that the massive health care law known as Obamacare, in place since 2010, is invalid because of a change in the federal tax law.


Does this mean the Affordable Care Act has been repealed?

Probably not.

The real takeaway here is that, despite Judge O’Connor’s ruling, nothing has changed. This was the opinion of one Federal District judge which is sure to be challenged until overturned, and all the way to the Supreme Court if necessary. The process will take many months, if not years, and until such time as the appeals have been exhausted, the ACA remains the law of the land.


What does Judge O’Connor’s ruling mean for my Business?

Essentially, nothing. At least, not yet. Because the ACA is still intact, we strongly recommend that our clients continue to implement their strategies for complying with the ACA in 2019, including all recordkeeping and reporting obligations.

For Employers with 50 or more full time or full-time equivalents, this means:

  • You must file your 2018 Employer Transmit Form 1094-C and Employee Transmit Form 1095-C to the IRS for most employers by April 30, 2019. The IRS uses these forms to determine whether you are offering all your eligible full-time employees both an affordable plan and Minimum Value Plan (MVP), or at least a Minimum Essential Coverage plan (MEC). The 1094-C forms help the IRS determine if a company is in compliance with the “Employer Shared Responsibility” portion of the Affordable Care Act and whether the company is responsible for Tier I penalties ($2000 per employee not offered an affordable or qualified MVP plan or a MEC plan) or Tier II penalties ($3000 per employee who was not offered a Minimum Value Plan at Affordable Rates and Qualified MVP design and went to the exchange and received a Federal Subsidy).
  • Keep in mind that even though the penalty obligation associated with the individual mandate has been reduced to zero dollars, if you offer MEC plans to your non-exempt hourly employees, you will still be held responsible for the Tier II penalty of $3000 for any full-time employee who goes to your state exchange and receives a Federal Subsidy.
  • If you employ “variable hour” employees, you must continue to track and monitor hours for those employees who are under a “look-back period” exclusion, depending on the “look-back “ time frame your company has established.
  • You must continue to enroll eligible full-time employees after 90 days, with coverage to begin at the end of that 90-day period


What if the District Court’s ruling is upheld by the Supreme Court and the Affordable Care Act is declared unconstitutional?

If that unlikely event were to happen, much of the regulation would fall back to the individual states. This potentially could be challenging for multi-state, multi-location businesses. However, it is worth noting that this was essentially the case prior to the passage of the ACA.

For employers with 50 or more full-time employees, the greatest impact would likely be on fully-insured plans typically offered through larger health insurance carriers like Blue Cross, United Health, Aetna, Cigna, and Humana. States would be required to address ACA-era developments such as community rating, Medical Loss Ratio requirements, and Essential Health Benefit requirements. And most certainly some states would seek to impose state-level Employer Shared Responsibility penalties, along with associated record-keeping and reporting obligations.


So, what’s the bottom line?

One thing is certain: No matter how this turns out, as an employer, you still have 2019 Affordable Care Act responsibilities with which you must continue to comply in 2019.

Beyond that, it’s anyone’s guess. Until that time, if you have questions or would like a complimentary analysis of your current plan, contact me at 1 (800) 821-7715 x109, or via e-mail at

Author: John Owens

John Owens is Vice President of Lewer Benefits Group. He is a renowned medical insurance consultant with more than 36 years of employee benefit experience. He assists small business clients in designing affordable and sustainable health and benefit programs.