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Fact Sheet
Con$ngent Labor and the ACA Following the King v Burwell Ruling
In its King v Burwell ruling, the United States Supreme Court upheld an Internal Revenue Service (IRS) regulation that unilaterally extended coverage of the Patient Protection and Affordable Care Act (ACA) subsidies and penalties to all of the states, the Court saved the ACA. Had those subsidies and penalties been deemed unlawful, the ACA would have become financially insolvent. Further, the subsidies for those who had purchased health insurance through the Federally run Healthcare.gov marketplace were preserved.
NFIB v Sebelius King v Burwell is the second case brought against the ACA. In NFIB v Sebelius, the first Court decision on the
ACA Compliant
ACA, everyone felt the main issue would be whether the Federal government possesses the authority within the Commerce Clause to enact an individual
Employers of third-party contingent talent
mandate. The Court surprised most by ruling that it
(temps, independent contractors,
does not. However, the Court concluded the penalty
consultants, et al.) need to ensure they are
equates to a tax, the entire mandate was permissible, falling within the realm of the Federal government’s
compliant with the ACA.
taxing authority.
What Led to King v Burwell
run their own and others seeing their state-run
When the ACA passed in 2010, most believed each
exchanges fail. In all, approximately two-thirds (34) of
state would want to run their own health insurance
the states ended up without their own exchanges. To
exchange—online marketplaces that allow consumers
ensure health insurance coverage in these states, the
to shop among competing insurance plans. But this
Federal government intervened and established
did not come to pass, with some states declining to
Federally operated exchanges.
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Here is the problem with this approach: the language
authority to enforce the law in states without a
of the ACA appeared to limit subsidies and penalties
state-run exchange. With two-thirds of states
to states operating their own exchanges (about one-
seemingly exempt from subsidies and most penalties,
third). Those without their own exchanges were
6.4 million low- and moderate-income people in
exempt. Fearing widespread exemptions would bring
those states would have lost Federal subsidies used
about the collapse of the ACA, the IRS issued
to pay for their insurance. Further, the employer
regulations granting subsidies and enforcing penalties
“Pay-or-Play” mandate would have become invalid in
in all states, regardless of whether they had state-
those same states. The consequence: most predicted
established exchanges.
the ACA would implode on itself.
King v Burwell: The Decision
In the ruling, which upheld the ACA, the Court
In King v Burwell, a group of citizens (with a self-
that the ACA was passed to improve health
employed limousine driver named David King from Virginia a the lead plaintiff) challenged the IRS’
majority looked to the intent of the law, concluding insurance markets, not to destroy them, and thus nationwide availability of the exchanges is necessary in order to avoid “the type of calamitous result that Congress plainly meant to avoid.”
ACA and the Contingent Workforce
King v Burwell Decision In the ruling, the Court majority looked to the intent of the law, concluding that the
The ACA is likely here to stay, at least for the foreseeable future. Employers of third-party contingent talent (temps, independent contractors, consultants, et al.) need to ensure they are compliant with the ACA. They need to understand the employer mandate and what is required—and be
ACA was passed to improve health
prepared to face (and pay) the consequences if they
insurance markets, not to destroy them, and
fail to adhere to the stipulations set forth in the ACA.
thus nationwide availability of the exchanges is necessary in order to avoid “the type of calamitous result that Congress plainly meant to avoid.”
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With more than two decades of experience helping organizations to manage their contingent labor programs, PRO Unlimited possesses a comprehensive understanding of the ACA and how it affects the contingent workforce. Contact PRO today to find out how we can assess your ACA risks as related to your contingent labor program and institute a worker misclassification and coemployment risk management program that addresses the ACA and other regulations.
If you have ques$ons about the ACA, the King v Burwell Ruling, and con$ngent labor, email us at
[email protected] or call us at 1.800.291.1099.
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About PRO Unlimited
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PRO Unlimited offers purely vendor-neutral Managed Service Provider (MSP) and Vendor Management System (VMS) solutions for the e-procurement and management of contingent labor, 1099/co-employment risk management, and third-party payroll for client-sourced contract talent. 7777 Glades Road, Suite 208, Boca Raton, Florida 33434
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[email protected]
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