Court Ruling Obamacare Unconstitutional Leaves Obamacare Future Uncertain As Annual Enrollment Period Ends

December 15, 2018

A ruling by a Federal District judge on Friday (December 14, 2018) ruled unconstitutional the Patient Protection and Affordable Care Act (ACA) touches off a new wave of uncertainty about the future of the massive healthcare reform law commonly known as Obamacare just as the enrollment period for 2019 health coverage ended. While Federal District Judge Reed O’Connor finds in his ruling released on Friday that amendments passed by Congress last December robbed the ACA of its original constitutionality, only time will tell if the ruling actually will end the ACA reforms or the effect of such ruling on the hotly debated ACA reforms and other statutory and regulatory reforms Congress and the Trump Administration subsequently prospectively or retrospectively. Consequently, health plans, their employer and other sponsors, insurers, administrators, and fiduciaries; health care providers, consumers and others will need to watch developments closely.

Justice O’Connor’s decision was released one day before the last day of the enrollment period for Americans to elect whether and what coverage, if any, to enroll in through the Obamacare exchanges for calendar 2019.

In Texas v. US, Texas Governor Greg Abbott and other Republican governors challenged the constitutionality of the ACA following passage of the Tax Cuts and Jobs Act of 2017 (TCJA). The plaintiffS argued the TCJA rendered the ACA unconstitutional because it repealed the individual mandate of the ACA upon which the Supreme Court previously found the ACA constitutional.

In the 2012 decision in Nat’l Fed’n of Indep. Businesses v. Sebelius (NFIB), 567 U.S. 519, 530–38 (2012) written by Chief Justice Roberts, the Supreme Court ruled that Congress could not rely upon the Commerce Clause for Constitutional authority to enact the ACA.  However, the Supreme Court nevertheless found the Individual Mandate provisions of the ACA preserved the constitutionality of the ACA as a constitutional exercise of Congress’ Taxing Power.

In Texas v. US, the plaintiff governors argue that the repeal of the Individual Mandate as part of Congress’ passage of the TCJA last December robbed the ACA of its constitutionality.  They say it is no longer fairly readable as an exercise of Congress’s Tax Power and continues to be unsustainable under the Interstate Commerce Clause. They further urge that  if they are correct, the balance of the ACA is untenable as inseverable from the Invalid Mandate. Judge O’Connor agreed with the plaintiff’s in his ruling on Friday.  Now it remains to be seen if his ruling  will face and withstand the appeal and if so, what effect it will have on Obamacare overall and other subsequent statutory and regulatory reforms.

While only time will tell whether the decision stands and its effect, the path to clarity promises to be filled with more drama and uncertainty.   Former US Attorney General Jeff Sessions previously had stated that the Justice Department under his leadership would not expend resources to defend the ACA.  It remains to be seen how the Justice Department will not respond in light of his recent resignation.  Even if the Justice Department does not step up to defend Obamacare, it is likely that states like California that have intervened in support of the ACA in the litigation will attempt to appeal the action.  Assuming that an appeal proceeds, a Court of Appeals would hear the appeal before an almost certain appeal by the losing side in that appeal to the United States Supreme Court, where President Trump’s new appointee would hear the action.  Along with the possibility that these Courts will uphold the trial court’s ruling, either of these appeals courts could overrule the trial court in whole or in part. Thus, subsequent appeals decisions could:

  • Reverse Judge O’Connor’s ruling entirely, leaving The ACA intact in its current form; or
  • Uphold part but not all of the decision, leaving some parts in place but not others.

pending further decisions, it remains unclear if subsidies, prohibitions against preexisting conditions, guaranteed issue, cost regulations, benefit and coverage mandates and other insurance reforms, health care billing and other reforms will survive.

Meanwhile, regardless of the outcome of the appeals, the decision and its fallout almost certainly will touch off more debate in Congress.  With health care reform already a hot topic, more Congressional battles were inevitable. However the decision adds a new and significant wrinkle to the politics of the health reform fight.

In January November’s election will cause the leadership of the House of Representatives is set to transfer from Republicans to Democrats while leaving control over the Senate in the hands of Republications.  With leadership of the two legislative bodies split, Democrats are unlikely to be able to use their new control of the House to enact legislation that would overrule outright an adverse decision by the courts. Consequently, Democrats will have an uphill battle if the court decision stands unless and until they can regain Senate control. Instead they are likely to be related to the role occupied by the House the past 4 years in which bills to enact the Democrat vision will pass the House only to die a quick death in the Republican controlled Senate or face veto by the Republican President.

On the other hand, Republicans also could not overcome a decision unfavorable to their agenda for the opposite reason: Despite control of the majority in the Senate and having a Republican President opposed to the ACA, Republicans can’t enact legislation without winning a majority of votes in the House.

On the other hand, either party can and almost certainly will use its veto power over the other party’s agenda. The fight likely will spill over into budget, immigration, workforce and other jet legislation that otherwise might and should enjoy bipartisan support in Congress.

As the litigation proceeds, concerned parties will want to keep a close eye of the Courts, the regulation and enforcement actions of the Trump Administration and the Congress.

Meanwhile, it is important to keep in mind that implementation of Judge O’Connor’s decision is stayed pending appeal.

About the Author

Recognized by her peers as a Martindale-Hubble “AV-Preeminent” (Top 1%) and “Top Rated Lawyer” with special recognition LexisNexis® Martindale-Hubbell® as “LEGAL LEADER™ Texas Top Rated Lawyer” in Health Care Law and Labor and Employment Law; as among the “Best Lawyers In Dallas” for her work in the fields of “Labor & Employment,” “Tax: Erisa & Employee Benefits,” “Health Care” and “Business and Commercial Law” by D Magazine, Cynthia Marcotte Stamer is a practicing attorney board certified in labor and employment law by the Texas Board of Legal Specialization and management consultant, author, public policy advocate and lecturer widely known for 30+ years of managed care and other health industry, health and other benefit and insurance, workforce and other management work, public policy leadership and advocacy, coaching, teachings, and publications.

Past Chair of the ABA Managed Care & Insurance Interest Group, a Fellow in the American College of Employee Benefit Counsel, the American Bar Foundation and the Texas Bar Foundation, Ms. Stamer is nationally recognized as a thoughtleader in health benefits and health care matters domestically and internationally.  She has been continuously involved the design, regulation, administration and defense of managed care and other health and employee benefit, health care, human resources and other staffing and workforce arrangements, contracts, systems, and processes.  As a continuous component of this work, Ms. Stamer has worked closely with these and other clients on the design, development, administration, defense, and breach and data recovery of health care, workforce, insurance and financial services, trade secret and other information technology, data and related process and systems development, policy and operations throughout her career.

Scribe of the ABA JCEB annual Office of Civil Rights agency meeting, Ms. Stamer also is widely recognized for her extensive work and leadership on leading edge health care and benefit policy and operational issues.

Ms. Stamer’s clients include employers and other workforce management organizations; employer, union, association, government and other insured and self-insured health and other employee benefit plan sponsors, benefit plans, fiduciaries, administrators, and other plan vendors;  managed care organizations, insurers, self-insured health plans and other payers and their management; public and private, domestic and international hospitals, health care systems, clinics, skilled nursing, long-term care, rehabilitation and other health care providers and facilities; medical staff, health care accreditation, peer review and quality committees and organizations; managed care organizations, insurers, third-party administrative services organizations and other payer organizations; billing, utilization management, management services organizations; group purchasing organizations; pharmaceutical, pharmacy, and prescription benefit management and organizations; claims, billing and other health care and insurance technology and data service organizations; other health, employee benefit, insurance and financial services product and solutions consultants, developers and vendors; and other health, employee benefit, insurance, technology, government and other management clients.

A former lead consultant to the Government of Bolivia on its Pension Privatization Project with extensive domestic and international public policy concerns in pensions, healthcare, workforce, immigration, tax, education and other areas, Ms. Stamer has been extensively involved in U.S. federal, state and local health care and other legislative and regulatory reform impacting these concerns throughout her career. Her public policy and regulatory affairs experience encompasses advising and representing domestic and multinational private sector health, insurance, employee benefit, employer, staffing and other outsourced service providers, and other clients in dealings with Congress, state legislatures, and federal, state and local regulators and government entities, as well as providing advice and input to U.S. and foreign government leaders on these and other policy concerns.

Beyond her public policy and regulatory affairs involvement, Ms. Stamer also has extensive experience helping these and other clients to design, implement, document, administer and defend workforce, employee benefit, insurance and risk management, health and safety, and other programs, products and solutions, and practices; establish and administer compliance and risk management policies; comply with requirements, investigate and respond to government; accreditation and quality organizations; private litigation and other federal and state health care industry investigations and enforcement actions; evaluate and influence legislative and regulatory reforms and other regulatory and public policy advocacy; training and discipline; enforcement, and a host of other related concerns. Ms. Stamer’s experience in these matters includes supporting these organizations and their leaders on both a real-time, “on demand” basis with crisis preparedness, intervention and response as well as consulting and representing clients on ongoing compliance and risk management; plan and program design; vendor and employee credentialing, selection, contracting, performance management and other dealings; strategic planning; policy, program, product and services development and innovation; mergers, acquisitions, and change management; workforce and operations management, and other opportunities and challenges arising in the course of their operations.

Ms. Stamer also has extensive health care reimbursement and insurance experience advising and defending plan sponsors, administrators, insurance and managed care organizations, health care providers, payers, and others about Medicare, Medicaid, Medicare and Medicaid Advantage, Tri-Care, self-insured group, association, individual and employer and association group and other health benefit programs and coverages including but not limited to advising public and private payers about coverage and program design and documentation, advising and defending providers, payers and systems and billing services entities about systems and process design, audits, and other processes; provider credentialing, and contracting; providers and payer billing, reimbursement, claims audits, denials and appeals, coverage coordination, reporting, direct contracting, False Claims Act, Medicare & Medicaid, ERISA, state Prompt Pay, out-of-network and other nonpar insured, and other health care claims, prepayment, post-payment and other coverage, claims denials, appeals, billing and fraud investigations and actions and other reimbursement and payment related investigation, enforcement, litigation and actions. Scribe for the ABA JCEB annual agency meeting with HHS OCR, she also has worked extensively on health and health benefit coding, billing and claims, meaningful use and EMR, billing and reimbursement, quality measurement and reimbursement, HIPAA, FACTA, PCI, trade secret, physician and other medical, workforce, consumer financial and other data confidentiality and privacy, federal and state data security, data breach and mitigation, and other information privacy and data security concerns.

Author of leading works on a multitude of health care, health plan and other health industry matters, the American Bar Association (ABA) International Section Life Sciences Committee Vice Chair, a Scribe for the ABA Joint Committee on Employee Benefits (JCEB) Annual OCR Agency Meeting, former Vice President of the North Texas Health Care Compliance Professionals Association, past Chair of the ABA Health Law Section Managed Care & Insurance Section, past ABA JCEB Council Representative and CLE and Marketing Committee Chair, past Board President of Richardson Development Center (now Warren Center) for Children Early Childhood Intervention Agency, past North Texas United Way Long Range Planning Committee Member, and past Board Member and Compliance Chair of the National Kidney Foundation of North Texas, Ms. Stamer’s health industry clients include public health organizations; public and private hospitals, healthcare systems, clinics and other health care facilities; physicians, physician practices, medical staff, and other provider organizations; skilled nursing, long-term care, assisted living, home health, ambulatory surgery, dialysis, telemedicine, DME, Pharma, clinics, and other health care providers; billing, management and other administrative services organizations; insured, self-insured, association and other health plans; PPOs, HMOs and other managed care organizations, insurance, claims administration, utilization management, and other health care payers; public and private peer review, quality assurance, accreditation and licensing; technology and other outsourcing; healthcare clearinghouse and other data; research; public and private social and community organizations; real estate, technology, clinical pathways, and other developers; investors, banks and financial institutions; audit, accounting, law firm; consulting; document management and recordkeeping, business associates, vendors, and service providers and other professional and other health industry organizations; academic medicine; trade associations; legislative and other law making bodies and others.

A popular lecturer and widely published author on health industry concerns, Ms. Stamer continuously advises health industry clients about contracting, credentialing and quality assurance,  compliance and internal controls, workforce and medical staff performance, quality, governance, reimbursement, privacy and data security, and other risk management and operational matters. Author of works on Payer and Provider Contracting and many other managed care concerns, Ms. Stamer also publishes and speaks extensively on health and managed care industry regulatory, staffing and human resources, compensation and benefits, technology, public policy, reimbursement and other operations and risk management concerns.

A Fellow in the American College of Employee Benefit Counsel, the American Bar Foundation and the Texas Bar Foundation, Ms. Stamer also shares her thought leadership, experience and advocacy on these and other related concerns by her service in the leadership of the Solutions Law Press, Inc. Coalition for Responsible Health Policy, its PROJECT COPE: Coalition on Patient Empowerment, and a broad range of other professional and civic organizations including North Texas Healthcare Compliance Association, a founding Board Member and past President of the Alliance for Healthcare Excellence, past Board Member and Board Compliance Committee Chair for the National Kidney Foundation of North Texas; former Board President of the early childhood development intervention agency, The Richardson Development Center for Children (now Warren Center For Children); current Vice Chair of the ABA Tort & Insurance Practice Section Employee Benefits Committee, current Vice Chair of Policy for the Life Sciences Committee of the ABA International Section, Past Chair of the ABA Health Law Section Managed Care & Insurance Section, a current Defined Contribution Plan Committee Co-Chair, former Group Chair and Co-Chair of the ABA RPTE Section Employee Benefits Group, past Representative and chair of various committees of ABA Joint Committee on Employee Benefits; an ABA Health Law Coordinating Council representative, former Coordinator and a Vice-Chair of the Gulf Coast TEGE Council TE Division, past Chair of the Dallas Bar Association Employee Benefits & Executive Compensation Committee, a former member of the Board of Directors of the Southwest Benefits Association and others.

For more information about Ms. Stamer or her health industry and other experience and involvements, see here or contact Ms. Stamer via telephone at (214) 452-8297 or via e-mail here.

About Solutions Law Press, Inc.™

Solutions Law Press, Inc.™ provides human resources and employee benefit and other business risk management, legal compliance, management effectiveness and other coaching, tools and other resources, training and education on leadership, governance, human resources, employee benefits, data security and privacy, insurance, health care and other key compliance, risk management, internal controls and operational concerns. If you find this of interest, you also be interested reviewing some of our other Solutions Law Press, Inc.™ resources here such as:

If you or someone else you know would like to receive future updates about developments on these and other concerns, please be sure that we have your current contact information including your preferred e-mail by creating your profile here.

NOTICE: These statements and materials are for general informational and purposes only. They do not establish an attorney-client relationship, are not legal advice or an offer or commitment to provide legal advice, and do not serve as a substitute for legal advice. Readers are urged to engage competent legal counsel for consultation and representation in light of the specific facts and circumstances presented in their unique circumstance at any particular time. No comment or statement in this publication is to be construed as legal advise or an admission. The author reserves the right to qualify or retract any of these statements at any time. Likewise, the content is not tailored to any particular situation and does not necessarily address all relevant issues. Because the law is rapidly evolving and rapidly evolving rules makes it highly likely that subsequent developments could impact the currency and completeness of this discussion. The presenter and the program sponsor disclaim, and have no responsibility to provide any update or otherwise notify any participant of any such change, limitation, or other condition that might affect the suitability of reliance upon these materials or information otherwise conveyed in connection with this program. Readers may not rely upon, are solely responsible for, and assume the risk and all liabilities resulting from their use of this publication.

Circular 230 Compliance. The following disclaimer is included to ensure that we comply with U.S. Treasury Department Regulations. Any statements contained herein are not intended or written by the writer to be used, and nothing contained herein can be used by you or any other person, for the purpose of (1) avoiding penalties that may be imposed under federal tax law, or (2) promoting, marketing or recommending to another party any tax-related transaction or matter addressed herein.

©2018 Cynthia Marcotte Stamer. Non-exclusive right to republish granted to Solutions Law Press, Inc.™ For information about republication, please contact the author directly. All other rights reserved.

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Posted by Cynthia Marcotte Stamer

Read Trump Health Care Executive Order

October 12, 2017

President Trump today (October 12, 2017) issued the following that he promised to be the first in a series of executive orders and other administrative actions that his administration will roll out to provide Obamacare relief  for consumers, employers and others by promoting healthcare choice and competition given the continued difficulty by the Republican-led Congress to pass legislation repealing or replacing the health care law.

What actually will result remains to be seen.  Like the January 20, 2017 Executive Order Minimizing the Economic Burden of the Patient Protection and Affordable Care Act Pending Repeal that President Trump signed as his first executive order, the new Executive Order doesn’t actually change anything; it merely directs the agencies to review and propose for implementation changes to regulations and other guidance allowed by law.

On the heels of his announcement of the Executive Order, President Trump moved forward on his promise to take other action on Obamacare by announcing that the Administration will not continue funding for individual subsidies that currently are continued under an Obama Administration action in the absence of Congressional action funding those subsidies.

Concerned parties should monitor and inform themselves about proposed changes in the Executive Order and other actions as they are proposed and develop, and provide timely comments and other input to help influence the shape and content of any changes proposed or adopted in response to the Executive Order.  Solutions Law Press, Inc. will be monitoring developments.   Stay tuned for updates.

Language of Executive Order

By the authority vested in me as President by the Constitution and the laws of the United States of America, it is hereby ordered as follows:

Section 1. Policy.

(a) It shall be the policy of the executive branch, to the extent consistent with law, to facilitate the purchase of insurance across State lines and the development and operation of a healthcare system that provides high-quality care at affordable prices for the American people. The Patient Protection and Affordable Care Act (PPACA), however, has severely limited the choice of healthcare options available to many Americans and has produced large premium increases in many State individual markets for health insurance. The average exchange premium in the 39 States that are using http://www.healthcare.gov in 2017 is more than double the average overall individual market premium recorded in 2013. The PPACA has also largely failed to provide meaningful choice or competition between insurers, resulting in one-third of America’s counties having only one insurer offering coverage on their applicable government-run exchange in 2017.

(b) Among the myriad areas where current regulations limit choice and competition, my Administration will prioritize three areas for improvement in the near term: association health plans (AHPs), short-term, limited-duration insurance (STLDI), and health reimbursement arrangements (HRAs).

(i) Large employers often are able to obtain better terms on health insurance for their employees than small employers because of their larger pools of insurable individuals across which they can spread risk and administrative costs. Expanding access to AHPs can help small businesses overcome this competitive disadvantage by allowing them to group together to self-insure or purchase large group health insurance. Expanding access to AHPs will also allow more small businesses to avoid many of the PPACA’s costly requirements. Expanding access to AHPs would provide more affordable health insurance options to many Americans, including hourly wage earners, farmers, and the employees of small businesses and entrepreneurs that fuel economic growth.

(ii) STLDI is exempt from the onerous and expensive insurance mandates and regulations included in title I of the PPACA. This can make it an appealing and affordable alternative to government-run exchanges for many people without coverage available to them through their workplaces. The previous administration took steps to restrict access to this market by reducing the allowable coverage period from less than 12 months to less than 3 months and by preventing any extensions selected by the policyholder beyond 3 months of total coverage.

(iii) HRAs are tax-advantaged, account-based arrangements that employers can establish for employees to give employees more flexibility and choices regarding their healthcare. Expanding the flexibility and use of HRAs would provide many Americans, including employees who work at small businesses, with more options for financing their healthcare.

(c) My Administration will also continue to focus on promoting competition in healthcare markets and limiting excessive consolidation throughout the healthcare system. To the extent consistent with law, government rules and guidelines affecting the United States healthcare system should:

(i) expand the availability of and access to alternatives to expensive, mandate-laden PPACA insurance, including AHPs, STLDI, and HRAs;

(ii) re-inject competition into healthcare markets by lowering barriers to entry, limiting excessive consolidation, and preventing abuses of market power; and

(iii) improve access to and the quality of information that Americans need to make informed healthcare decisions, including data about healthcare prices and outcomes, while minimizing reporting burdens on affected plans, providers, or payers.

Sec. 2. Expanded Access to Association Health Plans.

Within 60 days of the date of this order, the Secretary of Labor shall consider proposing regulations or revising guidance, consistent with law, to expand access to health coverage by allowing more employers to form AHPs. To the extent permitted by law and supported by sound policy, the Secretary should consider expanding the conditions that satisfy the commonality‑of-interest requirements under current Department of Labor advisory opinions interpreting the definition of an “employer” under section 3(5) of the Employee Retirement Income Security Act of 1974. The Secretary of Labor should also consider ways to promote AHP formation on the basis of common geography or industry.

Sec. 3. Expanded Availability of Short-Term, Limited‑Duration Insurance.

Within 60 days of the date of this order, the Secretaries of the Treasury, Labor, and Health and Human Services shall consider proposing regulations or revising guidance, consistent with law, to expand the availability of STLDI. To the extent permitted by law and supported by sound policy, the Secretaries should consider allowing such insurance to cover longer periods and be renewed by the consumer.

Sec. 4. Expanded Availability and Permitted Use of Health Reimbursement Arrangements.

Within 120 days of the date of this order, the Secretaries of the Treasury, Labor, and Health and Human Services shall consider proposing regulations or revising guidance, to the extent permitted by law and supported by sound policy, to increase the usability of HRAs, to expand employers’ ability to offer HRAs to their employees, and to allow HRAs to be used in conjunction with nongroup coverage.

Sec. 5. Public Comment.

The Secretaries shall consider and evaluate public comments on any regulations proposed under sections 2 through 4 of this order.

Within 180 days of the date of this order, and every 2 years thereafter, the Secretary of Health and Human Services, in consultation with the Secretaries of the Treasury and Labor and the Federal Trade Commission, shall provide a report to the President that:

(a) details the extent to which existing State and Federal laws, regulations, guidance, requirements, and policies fail to conform to the policies set forth in section 1 of this order; and

(b) identifies actions that States or the Federal Government could take in furtherance of the policies set forth in section 1 of this order.

Sec. 7. General Provisions.

(a) Nothing in this order shall be construed to impair or otherwise affect:

(i) the authority granted by law to an executive department or agency, or the head thereof; or

(ii) the functions of the Director of the Office of Management and Budget relating to budgetary, administrative, or legislative proposals.

(b) This order shall be implemented consistent with applicable law and subject to the availability of appropriations.

(c) This order is not intended to, and does not, create any right or benefit, substantive or procedural, enforceable at law or in equity by any party against the United States, its departments, agencies, or entities, its officers, employees, or agents, or any other person.

DONALD J. TRUMP

THE WHITE HOUSE,

October 12, 2017

Implications & Actions

The impact of this and other Executive Orders and other Presidential actions depend upon what actions, if any, the agencies determine they are allowed by law to take and how those changes are implemented.  Concerned persons and organizations should begin preparing input to the agencies and monitoring and commenting on proposals and other guidance to help shape the outcome.

Solutions Law Press, Inc. is preparing initial analysis of this Executive Order and will be closely monitoring and updating this analysis.  Follow up to learn more and stay abreast of new developments.

About The Author

Recognized by her peers as a Martindale-Hubble “AV-Preeminent” (Top 1%) and “Top Rated Lawyer” with special recognition LexisNexis® Martindale-Hubbell® as “LEGAL LEADER™ Texas Top Rated Lawyer” in Health Care Law and Labor and Employment Law; as among the “Best Lawyers In Dallas” for her work in the fields of “Labor & Employment,” “Tax: Erisa & Employee Benefits,” “Health Care” and “Business and Commercial Law” by D Magazine, Cynthia Marcotte Stamer is a practicing attorney board certified in labor and employment law by the Texas Board of Legal Specialization and management consultant, author, public policy advocate and lecturer widely known for management work, coaching, teachings, and publications.

Ms. Stamer works with businesses and their management, employee benefit plans, governments and other organizations deal with all aspects of human resources and workforce, internal controls and regulatory compliance, change management and other performance and operations management and compliance. Her day-to-day work encompasses both labor and employment issues, as well as independent contractor, outsourcing, employee leasing, management services and other nontraditional service relationships. She supports her clients both on a real-time, “on demand” basis and with longer term basis to deal with all aspects for workforce and human resources management, including, recruitment, hiring, firing, compensation and benefits, promotion, discipline, compliance, trade secret and confidentiality, noncompetition, privacy and data security, safety, daily performance and operations management, emerging crises, strategic planning, process improvement and change management, investigations, defending litigation, audits, investigations or other enforcement challenges, government affairs and public policy.

Well-known for her extensive work with health, insurance, financial services, technology, energy, manufacturing, retail, hospitality, governmental and other highly regulated employers, her nearly 30 years’ of experience encompasses domestic and international businesses of all types and sizes. Author of numerous works on privacy and data security, Ms. Stamer‘s experience includes involvement in cyber security and other data privacy and security matters for more than 20 years.

A Fellow in the American College of Employee Benefit Counsel, the American Bar Foundation and the Texas Bar Foundation, Ms. Stamer also shares her thought leadership, experience and advocacy on these and other concerns by her service as a management consultant,  business coach and consultant and policy strategist as well through her leadership participation in professional and civic organizations such her involvement as the Vice Chair of the North Texas Healthcare Compliance Association; Executive Director of the Coalition on Responsible Health Policy and its PROJECT COPE: Coalition on Patient Empowerment; former Board President of the early childhood development intervention agency, The Richardson Development Center for Children; former Gulf Coast TEGE Council Exempt Organization Coordinator; a founding Board Member and past President of the Alliance for Healthcare Excellence; former board member and Vice President of the Managed Care Association; past Board Member and Board Compliance Committee Chair for the National Kidney Foundation of North Texas; a member and policy adviser to the National Physicians’ Council for Healthcare Policy; current Vice Chair of the ABA Tort & Insurance Practice Section Employee Benefits Committee; current Vice Chair of Policy for the Life Sciences Committee of the ABA International Section; Past Chair of the ABA Health Law Section Managed Care & Insurance Section; ABA Real Property Probate and Trust (RPTE) Section former Employee Benefits Group Chair, immediate past RPTE Representative to ABA Joint Committee on Employee Benefits Council Representative, and Defined Contribution Committee Co-Chair, past Welfare Benefit Committee Chair and current Employee Benefits Group Fiduciary Responsibility Committee Co-Chair, Substantive and Group Committee member, Membership Committee member and RPTE Representative to the ABA Health Law Coordinating Council; past Chair of the Dallas Bar Association Employee Benefits & Executive Compensation Committee; a former member of the Board of Directors, Treasurer, Member and Continuing Education Chair of the Southwest Benefits Association and others.

Ms. Stamer also is a widely published author, highly popular lecturer, and serial symposia chair, who publishes and speaks extensively on human resources, labor and employment, employee benefits, compensation, occupational safety and health, and other leadership, performance, regulatory and operational risk management, public policy and community service concerns for the American Bar Association, ALI-ABA, American Health Lawyers, Society of Human Resources Professionals, the Southwest Benefits Association, the Society of Employee Benefits Administrators, the American Law Institute, Lexis-Nexis, Atlantic Information Services, The Bureau of National Affairs (BNA), InsuranceThoughtLeaders.com, Benefits Magazine, Employee Benefit News, Texas CEO Magazine, HealthLeaders, the HCCA, ISSA, HIMSS, Modern Healthcare, Managed Healthcare, Institute of Internal Auditors, Society of CPAs, Business Insurance, Employee Benefits News, World At Work, Benefits Magazine, the Wall Street Journal, the Dallas Morning News, the Dallas Business Journal, the Houston Business Journal, and many other symposia and publications. She also has served as an Editorial Advisory Board Member for human resources, employee benefit and other management focused publications of BNA, HR.com, Employee Benefit News, InsuranceThoughtLeadership.com and many other prominent publications and speaks and conducts training for a broad range of professional organizations and for clients on the Advisory Boards of InsuranceThoughtLeadership.com, HR.com, Employee Benefit News, and many other publications.

Want to know more? See here for details about the author of this update, attorney Cynthia Marcotte Stamer, e-mail her here or telephone Ms. Stamer at (469) 767-8872.

About Solutions Law Press, Inc.™

 Solutions Law Press, Inc.™ provides human resources and employee benefit and other business risk management, legal compliance, management effectiveness and other coaching, tools and other resources, training and education on leadership, governance, human resources, employee benefits, data security and privacy, insurance, health care and other key compliance, risk management, internal controls and operational concerns. If you find this of interest, you also be interested reviewing some of our other Solutions Law Press, Inc.™ resources at SolutionsLawPress.com such as the following:

If you or someone else you know would like to receive future updates about developments on these and other concerns, please provide your current contact information and preferences including your preferred e-mail by creating or updating your profile here.

NOTICE: These statements and materials are for general informational and purposes only. They do not establish an attorney-client relationship, are not legal advice, and do not serve as a substitute for legal advice. Readers are urged to engage competent legal counsel for consultation and representation in light of the specific facts and circumstances presented in their unique circumstance at any particular time. No comment or statement in this publication is to be construed as an admission. The author reserves the right to qualify or retract any of these statements at any time. Likewise, the content is not tailored to any particular situation and does not necessarily address all relevant issues. Because the law is rapidly evolving and rapidly evolving rules makes it highly likely that subsequent developments could impact the currency and completeness of this discussion. The presenter and the program sponsor disclaim, and have no responsibility to provide any update or otherwise notify any participant of any such change, limitation, or other condition that might affect the suitability of reliance upon these materials or information otherwise conveyed in connection with this program. Readers may not rely upon, are solely responsible for, and assume the risk and all liabilities resulting from their use of this publication.

Circular 230 Compliance. The following disclaimer is included to ensure that we comply with U.S. Treasury Department Regulations. Any statements contained herein are not intended or written by the writer to be used, and nothing contained herein can be used by you or any other person, for the purpose of (1) avoiding penalties that may be imposed under federal tax law, or (2) promoting, marketing or recommending to another party any tax-related transaction or matter addressed herein.

©2017 Cynthia Marcotte Stamer. Non-exclusive right to republish granted to Solutions  Law Press, Inc.™   For information about republication, please contact the author directly.  All other rights reserved.

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Posted by Cynthia Marcotte Stamer

ACA Prohibits Employer Paying Individual Health Premiums For Employees, IRS Says Again

March 22, 2015

Employers cannot pay for or reimburse employees for any portion of the cost for the employee to buy individual health insurance coverage for himself or his family from a Health Insurance Exchange or “Marketplace” established as part of the health care reforms of the Patient Protection & Affordable Care Act (ACA) or otherwise.  That’s the message of new IRS Notice 2015-17. Employers that since 2013 have paid for or reimbursed employers for individual health insurance costs through a cafeteria plan or otherwise in 2014 should contact qualified legal counsel experienced in the health plan rules of ACA and federal health plan rules to discuss their practice, the extent to which any payments or reimbursements previously paid can qualify for special temporary relief granted to small employers under IRS Notice 2015-17, and what if any corrective action the employer needs to take to correct any compliance concerns associated with current or prior year’s practice of paying for or reimbursing individual health policy costs.

Although certain brokers and consultants continue to aggressively promote arrangements under which employers pay for or reimburse employees for individual health policy premiums as a way for employers to circumvent some of the challenges for employers of offering health coverage to employees under the group health plan rules of ACA, the IRS, DOL and HHS have made clear since early 2013 that they view such practices as prohibited by ACA’s Market Reforms, regardless of whether the payment or reimbursement is done on a pre-tax or after-tax basis, or done through a formal “plan” or through any other employer payment plan or arrangement.  See FAQs About Affordable Care Act Implementation (Part XI) issued by the Department of Labor (DOL) and Department of Health & Human Services (HHS) on January 24, 2013; Notice 2013-54 and DOL Technical Release 2013-03 issued on September 13, 2013; IRS FAQ on Employer Healthcare Arrangements; and FAQs About Affordable Care Act Implementation (Part XXII) issued by DOL  and HHS on November 6, 2014.

While reaffirming the IRS, HHS and DOL’s previous guidance indicating that ACA’s Market reforms prohibit employer payment plans, Notice 2015-17 also:

  • Announces temporary transitional relief from excise tax penalties under Code § 4980D for certain arrangements maintained by qualifying small employers that maintained such arrangements in 2014.
  • Provides additional guidance on the tax treatment of employer payment plans; and
  • Supplements and clarifies the guidance provided in Notice 2013-54 and other guidance about ACA’s prohibition of employer payment plans.

In light of this guidance, any employer currently maintaining such arrangement immediately should consult with qualified legal counsel within the scope of attorney-client privilege about their arrangement, among other things to evaluate:

  • The legality of the existing and proposed arrangements and their liability and other implications on the employer’s compliance with ACA and resulting liabilities and responsibilities resulting therefrom in light of the additional guidance on the tax treatment of such arrangements set forth in Notice 2015-17, as well as previously published IRS and other Tri-Agencies guidance about employer payment plans; and
  • Whether any action needs to be taken to address any potential violation of Tri-Agency rules resulting from the arrangement.

When conducting this evaluation, employers and others  should use care not to over-estimate the scope of the temporary relief announced in Notice 2015-17.  First, the relief announced in 2015-17 only applies for the 2014 tax year for certain small employers from the self-reporting and excise tax liability provisions of Internal Revenue Code (Code) § 4980D for failure to satisfy market reforms in relation to the specific arrangements detailed in Notice 2015-17.  In this respect, Notice 2015-17’s transition relief only applies for the 2014 tax year to employer healthcare arrangements that are :

  • Employer payment plans, as described in Notice 2013-54, if the plan is sponsored by an employer that is not an Applicable Large Employer (ALE) under Code § 4980H(c)(2) and §§54.4980H-1(a)(4) and -2;
  • S corporation healthcare arrangements for 2-percent shareholder-employees;
  • Medicare premium reimbursement arrangements; and
  • TRICARE-related health reimbursement arrangements (HRAs).

When evaluating an existing, previous or proposed employer payment arrangement, employers and others involved should consider taking steps to arrange for their discussions and evaluations to be conducted in a manner that positions the party or parties to be able to claim attorney-client privilege of the discussions and to protect such privileges against waiver to the extent possible.  In this respect, employers and others involved in such arrangements should be cognizant that certain evidentiary privileges such as accountant-client privilege that sometimes might apply for certain tax representation purposes may provide less reliable evidentiary discovery protection than attorney-client privileges under the circumstances as  discussions with accountants or other non-attorney consultants or advisors typically do not generally provide protection like attorney-client privilege in non-tax civil litigation by private plaintiffs or enforcement actions by certain of the Tri-Agencies of potential violations of the ACA Market Reform prohibition.

ACA’s prohibition against employer payment of individual health insurance policy premiums is only one of an ever-growing list of ACA and other federal health plan rules that employers and other group health plan sponsors and their plans must meet.  Many of these rules also fall under a Sarbanes-Oxley style provision of the Code that requires most employers to evaluate and maintain their health plan’s compliance with the applicable rule or self-report and self-assess and pay the applicable penalty for the violation when filing their health plan’s annual Form 5500.  With the 2014 plan year Form 5500 filing deadline rapidly approaching, employers and their health plan fiduciaries, insurer and vendors will want to act quickly to review, identify and develop a plan with legal counsel to address any potential concerns with the market reform and other requirements of federal law promptly.

For Advice, Training & Other Resources

If your business need legal advice about the your health or other employee benefit or human resources practices, assistance assessing or resolving potential past or existing compliance exposures, or monitoring and responding to these or other workforce, benefits and compensation, performance and risk management, compliance, enforcement or management concerns, the author of this update, attorney Cynthia Marcotte Stamer may be able to help.

Board Certified in Labor & Employment Law, Past Chair of the ABA RPTE Employee Benefit & Other Compensation Arrangements Group, Co-Chair and Past Chair of the ABA RPTE Welfare Plan Committee, Vice Chair of the ABA TIPS Employee Benefit Plans Committee, an ABA Joint Committee On Employee Benefits Council representative, Past Chair of the ABA Health Law Section Managed Care & Insurance Section, a Fellow in the American College of Employee Benefit Counsel, ABA, and State Bar of Texas, Ms. Stamer has more than 25 years’ experience advising health plan and employee benefit, insurance, financial services, employer and health industry clients about these and other matters. Ms. Stamer has extensive experience advising and assisting health plans and insurers about ACA, and a wide range of other plan design, administration, data security and privacy and other compliance risk management policies.  Ms. Stamer also regularly represents clients and works with Congress and state legislatures, EBSA, IRS, EEOC, OCR and other HHS agencies, state insurance and other regulators, and others.   She also publishes and speaks extensively on health and other employee benefit plan and insurance, staffing and human resources, compensation and benefits, technology, public policy, privacy, regulatory and public policy and other operations and risk management concerns. Her publications and insights appear in the Health Care Compliance Association, Atlantic Information Service, Bureau of National Affairs, World At Work, The Wall Street Journal, Business Insurance, the Dallas Morning News, Modern Health Care, Managed Healthcare, Health Leaders, and a many other national and local publications.

You can review other recent human resources, employee benefits and internal controls publications and resources and additional information about the employment, employee benefits and other experience of the Cynthia Marcotte Stamer, PC here. If you or someone else you know would like to receive future updates about developments on these and other concerns, please be sure that we have your current contact information – including your preferred e-mail – by creating or updating your profile www.cynthiastamer.com or by registering to receive these and other updates here.  Recent examples of these updates include:

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NOTE:  This article is provided for educational purposes.  It is does not establish any attorney-client relationship nor provide or serve as a substitute for legal advice to any individual or organization.  Readers must engage properly qualified legal counsel to secure legal advice about the rules discussed in light of specific circumstances.

The following disclaimer is included to ensure that we comply with U.S. Treasury Department Regulations.  The Regulations now require that either we (1) include the following disclaimer in most written Federal tax correspondence or (2) undertake significant due diligence that we have not performed (but can perform on request).

ANY STATEMENTS CONTAINED HEREIN ARE NOT INTENDED OR WRITTEN BY THE WRITER TO BE USED, AND NOTHING CONTAINED HEREIN CAN BE USED BY YOU OR ANY OTHER PERSON, FOR THE PURPOSE OF (1) AVOIDING PENALTIES THAT MAY BE IMPOSED UNDER FEDERAL TAX LAW, or (2) PROMOTING, MARKETING OR RECOMMENDING TO ANOTHER PARTY ANY TAX-RELATED TRANSACTION OR MATTER ADDRESSED HEREIN.

©2015 Cynthia Marcotte Stamer, P.C. Non-exclusive license to republish granted to Solutions Law Press.  All other rights reserved.

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