Thursday, June 28, 2012 -
In a highly anticipated decision, a divided Supreme Court upheld almost all provisions of the Affordable Care Act (ACA), often referred to as “Obamacare.” Specifically, the Court held that the individual mandate is constitutional as a permissible exercise of the power of Congress to levy taxes. The Supreme Court also upheld the provisions of ACA extending Medicaid coverage to individuals with income less than 1331/3 percent of the poverty level, except that it overturned the authority of the Secretary of Health and Human Services to withhold existing Medicaid funding to any states that refuse to provide the increased coverage. With that limited exception, ACA remains in force.
Immediate Impact on Employers
Some employers may have delayed compliance in the hope that ACA would be held unconstitutional. Now, employers will have to accelerate efforts to comply with ACA’s requirements, some of which go into effect in the very near future. The most immediate requirements generally include:
Longer Term Impact
Many of the core provisions of ACA are scheduled to take effect in 2014, including state-based insurance exchanges, the individual mandate, the tax on large employers who do not provide affordable coverage to their employees, the subsidy for individuals with compensation less than 400 percent of the poverty level to purchase coverage through the exchanges, and the expansion of Medicaid. Between now and then, employers should evaluate the impact of those changes, including whether to implement new group health plans or modify existing plans (so as to avoid the employer penalty), or to terminate existing group health plans (and pay the employer penalty and allow employees to enroll for coverage under the exchanges).
Of course, ACA continues to be contentious. The election and actions by Congress, the regulatory agencies and the states may all impact the extent to which ACA is implemented. More fundamentally, the impact of ACA or any other health care reform measures on medical coverage costs remains to be seen. Employers will have to keep abreast of all of these developments between now and 2014.
Save the Date!
We stand ready to assist companies with these efforts. In addition, we will be holding a client seminar at 8:30 a.m. Wednesday, August 1, 2012, at the Sammy’s at One Cleveland Center (1375 East Ninth Street, Cleveland, Ohio), to discuss the practical implications of the decision for plan sponsors. More information about this seminar will be provided soon.
For additional information and discussion on this topic, please get in touch with your regular Calfee contact or one of the Employee Benefits and Executive Compensation attorneys listed below:
This alert is provided by Calfee, Halter & Griswold LLP for education and information purposes only. This alert is not intended to provide legal advice on specific subjects. The resolution of legal issues depends upon the specific facts of a particular situation and the laws involved. This alert may be considered advertising under applicable laws.