After one of the most important Supreme Court decisions in recent memory, companies can now start focusing on complying with the next wave of healthcare reform provisions.
The healthcare reform law was upheld by the Supreme Court by the slimmest of margins — a 5 to 4 vote.
The mandate that individuals obtain health insurance or pay a penalty — the centerpiece of the entire law — was deemed a violation of the Commerce Clause of the Constitution. But five of the justices ruled that the penalty for enforcing the mandate is actually a tax, and the implementation of it does not overstep Congress’ taxing power. So it will stand on those grounds.
The High Court also upheld the law’s expansion of Medicaid but said the federal government could not cut off federal money paid to the states for Medicaid programs in an attempt to get them to comply with the expansion.
This is a huge win for the Obama administration, but the political fight over the law is far from over. Republicans have said they’ll do all they can to overturn it. Mitt Romney’s even promised to undo it if elected president.
And the Supreme Court gave the Republicans one big piece of ammunition it will most certainly use against the Obama administration in the months leading up to the presidential election. It essentially deemed the mandate to buy insurance a tax — a concept the GOP’s likely to run with, campaigning that the current administration has heaped a new tax on citizens.
What’s up next
So where does this leave employers now? Essentially the same position they’ve been in since the law was enacted, gearing up to comply with the law’s provisions.
A quick look at some of the health reform issues companies will be facing:
- The first order of business: Deciding whether to continue to offer employees health care insurance in the first place. Companies with 50 or more workers will be subject to a penalty — in most cases, $2,000 per employee — if they decide to drop coverage. Just how many firms will decide to go that route is uncertain
- Employers will have to issue summaries of benefits and coverage during their first open enrollment on or after September 23, 2012
- Most employers will be required to report the cost of individuals’ health insurance on their 2012 W-2s
- Insurers will have to issue the first medical-loss ratio rebates this year
- Employers will need to amend their health FSAs to comply with the $2,500 limit on employee contributions by the end of 2014 plan year
- The state health exchanges are slated to be up and running in 2014
- Insurers will no longer be allowed to restrict coverage for those with pre-existing conditions starting in 2014, and
- Employers will be allowed to increase the value of the incentives they provide employees for participating in wellness programs to 30% of the cost of health coverage starting in 2014.