Benefits and Compensation

Latest Supreme Court ACA Ruling Preserves Status Quo for Employers

In what is being called a signal to foes of the Affordable Care Act (ACA), the U.S. Supreme Court’s latest ruling on the health care law preserves the status quo for employers.

ACA ruling
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In a 7-2 decision, the Court found the states challenging the ACA’s legality in California v. Texas did not have standing to bring their challenge. Justice Stephen Breyer wrote the majority opinion and was joined by Chief Justice John Roberts and Justices Sonia Sotomayor, Elena Kagan, Brett Kavanaugh, Amy Coney Barrett, and Clarence Thomas. Justices Samuel Alito and Neil Gorsuch dissented.

The decision, which gained the approval of four justices typically considered conservative, dismisses a challenge from Texas and other Republican-dominated states.

The majority opinion points out that to have standing, the states would need to “allege personal injury fairly traceable to the defendant’s allegedly unlawful conduct.” The opinion says none of the states making the challenge have shown such an injury.

Meaning for Employers

Nita Beecher, an attorney with FortneyScott in Washington, D.C., says she expects employers will be happy that they will continue to have an alternative for health coverage for nonemployees.

Also, Beecher says she expects the Biden administration will try “to shore up the ACA with changes that need to be made.” That effort may not be easy. “Right now, the only way they can fix it is either to change or eliminate the filibuster or try to pass the changes through reconciliation.”

Currently, the Senate is evenly divided between reliably Republican and Democratic votes. Vice President Kamala Harris can cast a tie-breaking vote, but to pass major legislation, 60 votes are needed to break a filibuster. It’s possible Democrats can use a process called budget reconciliation to pass legislation with just a simple majority, but that process is limited.

Regardless of what happens on the legislative front, Beecher says she believes the Supreme Court “is trying to tell Republicans that this is not the way to get rid of the ACA.” The latest case marks the third time the Supreme Court has upheld the law, which was enacted in 2010.

One effect of the ACA on employers is the employer shared responsibility provisions. Because of those provisions, certain employers—those deemed applicable large employers (ALEs)—must either offer minimum essential coverage that is “affordable” and provides “minimum value” to their full-time employees or potentially make an employer shared responsibility payment to the IRS. The IRS explains that to be an ALE, an employer must have had an average of at least 50 full-time employees during the preceding calendar year.

Tammy Binford writes and edits news alerts and newsletter articles on labor and employment law topics for BLR web and print publications.