Preparing employers for the Supreme Court decision on health care reform
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By week’s end, the U.S. Supreme Court is expected to publish its decision on the legality of the Patient Protection and Affordable Care Act, or PPACA (also called health care reform, HCR and ACA). With the fall congressional and presidential elections on the horizon, the Supreme Court decision is unlikely to end the debate over this legislation. Regardless of the Supreme Court decision and the looming elections, there will be an impact on employers that sponsor group health plans.
According to United Benefit Advisors (UBA), below are the possibilities (in particular order) and what each outcome would mean:
Entire Law is Ruled Constitutional
If PPACA in its entirety is ruled constitutional, employers will need to move forward with implementing the changes that the law requires. For 2012 and 2013, these include:
- Providing summaries of benefits coverage with the first open enrollment on or after Sept. 23, 2012.
- Reporting the value of medical coverage on the 2012 W-2.
- Reducing the maximum health flexible spending account (FSA) contribution to $2,500 (beginning with the 2013 plan year).
- Paying the Patient Centered Outcomes fee (due July 31, 2013).
Portions of the Law Ruled Constitutional
The Supreme Court may decide that portions of the law are constitutional and parts are not. For example, the Supreme Court could rule that the requirement that individuals obtain health coverage or pay a penalty (the “individual mandate”) exceeds Congressional authority. The Supreme may rule on which parts of the law should stay and which should be removed, or they may send the case back to a lower court to determine the details. Regardless, employer obligations to comply with the law would continue (see above), and the actions needed for 2012 and 2013 would continue to apply.
Entire Law is Ruled Unconstitutional
If the Supreme Court rules that PPACA, in its entirety, is unconstitutional, employers will not need to implement the changes that were to take effect for 2012 and later. Since portions of PPACA have already been implemented, there would be some uncertainty (and choices) on what should and can be done. Some things for employers to keep in mind:
- If the employer group plan or policy has been amended or written to include the 2010 and 2011 changes, the plan document or policy will need to be revised to remove the changes. Just because PPACA is ruled unconstitutional will not void the changes in the plan or policy.
- Aetna, Humana and UnitedHealthcare have stated that they will continue to administer their policies to include many of the changes that have already been implemented, even if that is not legally required.
- Employers that have self-funded plans will need to decide — and those who have fully insured plans may need to decide — if they want to roll back changes such as:
- Covering dependent children to age 26 (there will be tax issues with this unless the IRS provides a waiver).
- Elimination of lifetime and annual maximums for most benefits.
- Elimination of pre-existing condition limitations for dependents under age 19.
- First-dollar coverage for preventive care.
- Excluding over-the-counter prescription drugs for health FSA and health savings account (HSA) coverage.
This information is general and is provided for educational purposes only, and does not contain legal advice. This information should not be acted on without consulting legal counsel or other knowledgeable advisors.
Connelly, Carlisle, Fields & Nichols (CCF&N) is a member of the prestigious organization, United Benefit Advisors (UBA). With only 144 member firms across the U.S., UBA is open only to the best independent advisory firms – those who have a proven record of experience, integrity and financial success. UBA Members are local, independent advisory firms that understand the benefits needs of a local market, while still providing the breadth, knowledge and scale of the entire U.S.A market.
DISCLAIMER: Because of the generality of this update, and based on particular situations, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice, financial advice and/or the advice of a licensed insurance or certified human resource professional.
© Connelly, Carlisle, Fields & Nichols 2012