The U.S. Department of Health and Human Services (HHS) recently released a report showing that the national uninsured rate reached an all-time low of 7.7 percent in early 2023. This significant decline in the uninsured rate is a result of the Biden-Harris Administration’s efforts to expand healthcare coverage and lower costs.
Approximately 6.3 million people have gained coverage since 2020. This achievement coincides with the beginning of the Biden-Harris Administration in January 2021. The success of the historic ACA Open Enrollment period, during which a record-breaking 16 million Americans enrolled in coverage through HealthCare.gov and state websites, played a crucial role in reaching this historic low.
History of the Affordable Care Act
The Affordable Care Act (ACA) was first enacted under President Barack Obama in 2010, and not without a lot of angst and furor. As recently as 2016 efforts were afoot under President Trump to repeal and place the ACA. While the Individual Mandate was effectively eliminated, other elements of the ACA, including the Employer Mandate remain which was eliminated in 2017 and took effect in 2018.
But challenges have been ongoing. In 2020 the ACA was challenged in Supreme Court in California v. Texas. The challenge was reversed and remanded in a 7-2 opinion holding that plaintiffs lacked standing to challenge minimum essential coverage provision. Most recently, plaintiffs in Braidwood Management Inc. vs. Becerra asserted in part that the preventive services provision of the ACA violated the Appointments Clause of the US Constitution.
Despite these challenges, new enrollment figures clearly convey that the ACA has had its intended impact, providing health insurance coverage to a large number of Americans.
Implications for Employers
Under the ACA employers are mandated to provide healthcare coverage for employees. The Employer Shared Responsibility Payment (ESRP) provisions (also known as the Employer Mandate) took effect in 2015. The Employer Mandate requires Applicable Large Employers (AEs), employers with 50 or more full-time or full-time equivalent employees, to offer Minimum Essential Coverage (MEC) to at least 95% of their full-time workforce and their dependents.
In addition to coverage requirements, employers are also required to report compliance by submitting annual 1094-C and 1095-C filings, detailing the offers of coverage made to their employers. ALEs failing to comply with these requirements may be subject to penalties.
The Employer Mandate has likely been a key driver of increased ACA enrollments.
The Future of the ACA
The HHS reports that: “Changes in uninsured rates from 2020 to 2023 were largest among individuals with incomes below 100% of the Federal Poverty Level (FLP) and incomes between 200% and 400% FPL.” These results can be attributed to the significant gains in health care coverage driven by the Biden-Harris Administration’s policies.
Given these recent enrollment rates, it’s likely that the ACA—and the Employer Mandate—are here to stay. An additional indication that this is the case is the step up in IRS enforcement action. The IRS is issuing penalties through IRS Letter 226J that can run into the millions of dollars for ALEs not complying with requirements. Penalties are currently being issued for the 2020 tax year but employers may also be receiving letters for previous years. There is no statute of limitations for ACA penalties.
