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Supreme Court Decision On Health Care Reform - What It Means For Employers

July 12, 2012

On June 28, 2012, the United States Supreme Court upheld the constitutionality of the majority of the Patient Protection and Affordable Care Act (the “Affordable Care Act” or “ACA”).[1] The Supreme Court ruled that ACA’s individual mandate requirement is a constitutional exercise of Congress’s taxing power.  While, as with any federal legislation, prospective political action could affect the future of ACA, the Supreme Court’s ruling should give employers confidence to move forward in planning for the changes that ACA will bring to employer-sponsored health plans.

The important take-away from the Supreme Court’s ruling is that the health care reform initiatives that have already been implemented by Congress since the law’s passage in 2010 remain unchanged, and all forthcoming requirements will be put into effect as originally planned.

For the end of 2012 and the beginning of 2013, there are several requirements in ACA that employers should be mindful of, including but not limited to, the distribution of the summary of benefits and coverage statements (distribution must be in advance of the first open enrollment period that begins on or after September 23, 2012), the Form W-2 reporting for employer-sponsored health coverage (effective for 2012 Form W-2s), and the $2,500 cap on health FSA contributions (for plan years beginning on or after January 1, 2013).  We will be providing our clients with more detailed information in the upcoming months with respect to these issues.

The major ACA changes requiring employer action will largely become effective in 2014.  Employers should plan to devote significant time in early to mid-2013 in preparing for these changes.  We plan to offer client alerts and seminars addressing these changes.

[1] The one aspect of the law that the Supreme Court found unconstitutional involved ACA’s requirements for expanding Medicaid.  The Supreme Court ruled that Congress did not have the power to withhold federal Medicaid funding from states that fail to expand eligibility for Medicaid.  This part of the Court’s decision means that each state can decide whether to expand eligibility for Medicaid or maintain the status quo.  This may affect low-income individuals in states that elect not to expand eligibility for Medicaid, and the healthcare providers to such individuals, but it is unlikely to have significant impact on employers who sponsor health benefit plans.


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