Capitol Hill Update

U.S. Supreme Court Reaffirms ACA Subsidies; Legislative Efforts to Amend the Law Continue

Jul 10, 2015

The U.S. Supreme Court reaffirmed the Affordable Care Act (ACA) subsidies on June 25. In a 6-to-3 decision, the ruling maintains that the ACA authorized federal tax credits for eligible Americans living not only in states with their own exchanges but also in the 34 states that use the federal marketplace.

While the case of King v. Burwell has been decided, legislative efforts calling for the full repeal of the ACA will continue, leading up to next year’s presidential election. It is highly unlikely that the president would sign a bill repealing the signature legislative achievement of his time in office; however, smaller reforms, such as repealing the anticipated excise tax on high-value health care plans and changing the definition of a full-time worker, have garnered bipartisan support in Congress. In a press release issued following the announcement of the King v. Burwell decision, SHRM pledged to work with policymakers to address these proposed changes to the ACA.

Starting in 2018 under the law, an excise tax known as the “Cadillac tax” will be levied against employers whose health care plans cost more than $10,200 a year for individuals and $27,500 a year for families. Under the ACA, those plans are set to be taxed at 40 percent of the cost above those limits.

Left intact, the excise tax provision is expected to result in increased costs for health care, while unintentionally encouraging benefit design changes. These results, in turn, could discourage employer efforts to promote employee wellness and prevention, while a number of employees could see higher co-pays and deductibles, which may result in some employees declining employer-provided health care coverage due to cost considerations.

Two bills have been introduced in the U.S. House of Representatives to repeal the excise tax on high value health care plans. Rep. Joe Courtney (D-CT) introduced the Middle Class Health Benefits Tax Repeal Act of 2015 (H.R. 2050) and Rep. Frank Guinta (R-NH) introduced a similar proposal, the Ax the Tax on Middle Class Americans’ Health Plans Act (H.R. 879).

SHRM is supportive of both legislative proposals and has sent letters in support of the bills. In addition, 49 SHRM state councils and over 190 SHRM chapters signed onto the letter, urging the U.S. House of Representatives to take action and repeal the excise tax.

Members are encouraged to send a personal note to their respective House representative to reinforce the need for repeal of the excise tax. SHRM's Government Affairs team has prepared a template letter, available in the HR Policy Action Center. Through the HR Policy Action Center, you can edit and personalize your message and send it directly to your representative’s Washington, D.C., office.

Another initiative to amend the ACA is focused on the law’s definition of a full-time employee. As a member of the More Time for Full Time Coalition, a leading group of Washington, D.C., organizations in support of this effort, SHRM strongly supports the Save American Workers Act of 2015 (H.R. 30), introduced by Representatives Todd Young (R-IN) and Daniel Lipinski (D-IL), and the Forty Hours Is Full Time Act (S. 30), introduced by Senators Susan Collins (R-ME) and Joe Donnelly (D-IN). These bills would amend the ACA by redefining a “full-time employee” as one who is employed on average at least 40 hours a week. Under the ACA, employers with 50 or more full-time employees are required to provide health care coverage to their employees or pay a penalty. The ACA defines a full-time employee as one who works at least 30 hours a week.

SHRM members are encouraged to send a personal note to their respective senators in support of the Forty Hours Is Full Time Act. Visit SHRM's HR Policy Action Center for a template letter, which you can edit, personalize and send directly to your senator’s Washington, D.C., office.


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