Future of Affordable Care Act Still Open in the Courts; Applicable Large Employers Must Still Adhere to IRS’s Rigorous Requirements

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In July 2019, the Affordable Care Act (ACA) was once again challenged in the courts. On July 9, 2019, the Fifth Circuit Court of Appeals heard oral arguments in the case of Texas v. Azar. The case stemmed from a December 2018 court decision by District Court Judge Reed O’Connor, which deemed the ACA unconstitutional. However, further determinations on the constitutionality of the ACA as a whole remains unclear. It is still possible that arguments on the ACA may be brought to the Supreme Court.

Although the penalty for the Individual Mandate component of the ACA was set to $0 at the beginning of this year, Applicable Large Employers (that is, those employers with 50 or more full-time or full-time equivalent employees) must still be sure to adhere to the ACA. As the ACA stands now, Applicable Large Employers (ALEs) must continue to supply minimal essential health care coverage to employees which is affordable (9.86% of W2 wages). ALEs still need to provide proof that they meet this requirement to the IRS, or else risk receiving a Letter 226-J that may make them liable for an Employer Shared Responsibility Payment (ESRP).

In order to remain compliant with the ACA, ALEs still need to file Forms 1094-C and 1095-C with the IRS (the latter form must also be supplied to employees). If employers fail to file these forms correctly with the IRS, they risk receiving Letter 5005-A and may incur a separate penalty. Thus, it is critical that employers not only continue to offer affordableminimal essential coverage in line with the ACA, but that they also properly distribute and file Forms 1094-C and 1095-C.

As it stands, employers are far from off the hook when it comes to meeting the ACA’s requirements and withstanding the rigor of the IRS.  Consider working with a reputable vendor, like SPS/GZ, to ensure that you are meeting the IRS’s requirements under the Affordable Care Act and avoid any penalties.