Lots of ACA Developments Last Week 

Here's what you need to know.

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Published April 1, 2019

 

There’s never a dull moment when it comes to the Affordable Care Act (ACA). Some people love the law, some people hate it, and others find themselves somewhere in between. However, there’s one thing that’s for certain. The rules are constantly being challenged or changed. Here are three key developments that occurred last week:

Constitutionality of the ACA

Last year, a federal judge in Texas ruled that the ACA was now unconstitutional because there is no more Individual Mandate penalty. The judge found that all portions of the ACA are now void. That ruling has been appealed and is currently under review by the U.S. Court of Appeals for the 5th Circuit in New Orleans.

In response to the Texas ruling, The Trump administration had initially taken the position that only some parts of the ACA had to be repealed (those most closely linked to the Individual Mandate) while other parts of the law could stand. In a new filing by the Justice Department last week, the administration now says the Texas judge’s decision should be affirmed and all parts of the ACA should be invalidated. If the ACA were to be ruled unconstitutional, there is no replacement plan currently in place.

Association Health Plans

Last year, the Department of Labor (DOL) finalized new rules which relaxed regulations pertaining to association health plans (AHPs). The rules made it easier for self-employed persons and small businesses to join forces when purchasing health insurance plans. Under the new rules, AHPs are regulated similarly to large group health plans which are exempt from some ACA market reforms, including the requirement to cover all ten essential health benefits. Because AHPs don’t have to follow all the ACA market reforms, premiums are generally lower.

The legality of the new AHP rules were challenged by proponents of the ACA, and last week a federal judge ruled in their favor. The judge indicated that the new AHP rules are “clearly an end-run around the ACA.” A spokeswoman for the Justice Department indicated the Trump administration disagreed with the court’s decision. The administration can seek a stay and appeal the decision. This would allow the AHP rules to remain in force while an appeal is heard. The DOL could also revisit the rule and issue a different version of the previously finalized rules. It’s unclear at this point how the Trump administration will proceed.

Grandmothered Plans

Health plans in the individual and small group markets that were issued after March 23, 2010 and prior to January 1, 2014 are commonly referred to as grandmothered plans. Grandmothered plans were supposed to be terminated in 2014 because they failed to satisfy all of the ACA’ s market reforms, but the federal government has temporarily allowed these plans to continue. In an announcement last week, the Department of Health and Human Services (HHS) has indicated grandmothered plans can continue to be renewed for plan years beginning on or before October 1, 2020, provided the plans end by December 31, 2020. Absent this announcement, these plans were set to expire at the end of 2019. It should be noted that this extension is is an option for states and carriers, not a requirement.