The unusual Department of Justice decision to forego the defense of the individual mandate and pre-existing conditions provisions of the Affordable Care Act earlier this month signals the continued unravelling of the controversial Obama-era legislation. But there’s no relief yet for employers, who continue to be strapped by complex and confusing record keeping requirements and potential tax penalties under the the employer mandate of the ACA.

Gavel in Texas CourtroomOn June 8, the Department of Justice indicated that they would not defend the constitutionality of the personal mandate in a federal lawsuit filed by Texas and several other states. The states seek to overturn the legislation based on the 2012 decision in NFIB v. Sebelius, which linked the constitutionality of the Act with the tax component of the individual mandate for healthcare coverage. In short, ACA was deemed constitutional as an exercise of Congress’ power to levy taxes. That decision was called into question with the passage of the Tax Cuts and Jobs Act of 2017, The December tax bill eliminated the tax penalty without actually doing away with the individual mandate.

The DOJ decision concurs with the position of the plaintiffs in the case. It further links the requirement that insurers cover pre-existing conditions to the presumed unconstitutionality of the personal mandate (sans tax). Even if the healthcare act isn’t completely overturned, ensuing court decisions could render it unworkable.

Meanwhile, complexity, confusion, and cost continue from the employers perspective. The employer mandate requires significant data tracking and reporting from companies, regardless of the benefits that they may offer to employees. Particular areas of complexity include documentation of coverage offers, collection of premium data, and how to handle reporting and coverage for seasonal or contingent employees.

Several trade associations, let by the ERISA Industry Committee (ERIC), have submitted a letter to the U.S. Department of the Treasury, the Department of Health and Human Services, and the IRS seeking the suspension of employer requirements on the assumption that the employer mandate will be repealed or the ACA otherwise dismembered. The associations also submit that ACA Exchanges have not kept up with requirements to provide timely notice of health coverage issues that could incur penalties and to allow the opportunity to appeal or correct prior to IRS intervention.

At present, compliance with the ACA’s filing requirements continues to be a complicated additional task for HR professionals. In a recent Spark newsletter article, payroll company ADP suggests a 5 item checklist for ACA reporting:

  1. Create a monthly process for compiling and reconciling ACA reporting data.
  2. Align hiring strategy, including employment of seasonal employees and contractors, with ACA regulations, along with IRS and DOL requirements.
  3. Make sure that coverage offers are timely – by the first day of the fourth full calendar month of employment under ACA provisions.
  4. Track the status of seasonal and variable hour employees. If they must be classified as full-time, ACA provisions apply.
  5. Have a plan for handling marketplace notices and filing a timely appeal.


Newkirk, Vann R., The Federal Government Abandons the Most Popular Part of the ACA, The Atlantic, June 8, 2018
Employer groups call for suspension of ACA tax penalties, repeal of employer mandate, Wolters Kluwer Legal and Regulatory, June 13, 2018.
Norris, Louise, A due diligence checklist for ACA Reporting, ADP Spark, June 13, 2018

Image Credits: Courtroom, Richard Leeming, Flickr, Maze, Patrick Feller, Flickr