With the Supreme Courts decision in the Hobby Lobby case, and the granting of the injunction for Wheaton College that came shortly thereafter, there has been considerable hand wringing over the long term implications these decisions might have. Plan administrators and sponsors dealing with the Affordable Care Act should not forget about the short term compliance requirements. Nor should they get too caught up in thinking up ways to avoid compliance with the ACA. If anything, Hobby Lobby might be best viewed as a cautionary tale rather than a defining moment.
Many people have written about the decision itself but for all intents and purposes, it should be considered as fairly limited in its application. It was about a specific issue for a specific employer that had a specific structure. For a large portion of the employer-providing-health-coverage population, it will have no impact. In other words, most employers have to comply with the ACA as it is written. Looking for loopholes can be risky, not just for ACA compliance but also for ERISA compliance generally.
ERISA is designed to provide uniform administration of employee benefit plans, which is why this federal law specifically preempts state law. With the concept of uniform administration comes the expectation that plans will provide benefits (with limited exception) evenly and equally to all participants. Eligibility rules are designed to make it so that employees can readily ascertain how and when they can obtain benefits. Over time, the regulatory agencies have given guidance on safe harbors that plan sponsors can employ to increase the probability that they are correctly administering their plans.
The ACA, while primarily directed at employers, does certainly impact ERISA benefit plans. The Department of Labor and Internal Revenue Service have been providing various guidance for ACA compliance, and have even provided some safe harbor considerations for things like waiting periods and eligibility requirements that allow for some basic understanding of how to make it so that your ERISA plan complies with the ACA. Sure, they might be confusing sometimes and require some changes to our plan administration and how our plans provide benefits, but generally they are designed to make it easier for overall compliance.
Think of the rules as lane markers on a highway. Sure, you can change lanes to find one that you like better. And you can even go off-road to follow a more direct route to get where you want to go. But going off-road carries considerable risk. The same can be said for trying to avoid ACA compliance with creative solutions. I have seen lots of suggestions for ways an employer can avoid complying with the ACA. I have yet to see anyone guarantee that they will work. As 2015 approaches, it might be best to stay in the lanes. Conservative compliance in the short run allows for safer plan administration.
Keith R. McMurdy is a partner with Fox Rothschild, focusing on labor and employment issues; he can be reached at email@example.com or (212) 878-7919.
The information in this legal alert is for educational purposes only and should not be taken as specific legal advice.
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