The Federal Government does not have the power to order people to buy health insurance. The Federal Government does have the power to impose a tax on those without health insurance.

NFIB, et al., v. Sebelius, Chief Justice John Roberts Majority Opinion, p 44

The Supreme Court of the U.S. (SCOTUS) last week upheld the Patient Protection & Affordable Care Act (PPACA) as a constitutional exercise of Congress’s power to “lay and collect taxes.”

The historic 5-4 split decision brings to a dramatic close two years of contentious litigation over President Obama’s signature healthcare reform legislation.

The 2010 healthcare reform law, and specifically its controversial mandate that citizens purchase health insurance coverage or pay a special tax, is constitutional.

The decision of the nation’s Highest Court effectively puts a big “The End” to thousands of pages of legal briefs and millions of words of argumentation about constitutional law. Read more.

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SCOTUS, PPACA and YOU

Mon Jul 2, 2012

The Federal Government does not have the power to order people to buy health insurance. The Federal Government does have the power to impose a tax on those without health insurance.

NFIB, et al., v. Sebelius, Chief Justice John Roberts Majority Opinion, p 44

The Supreme Court of the U.S. (SCOTUS) last week upheld the Patient Protection & Affordable Care Act (PPACA) as a constitutional exercise of Congress’s power to “lay and collect taxes.”

The historic 5-4 split decision brings to a dramatic close two years of contentious litigation over President Obama’s signature healthcare reform legislation.

The 2010 healthcare reform law, and specifically its controversial mandate that citizens purchase health insurance coverage or pay a special tax, is constitutional.

The decision of the nation’s Highest Court effectively puts a big “The End” to thousands of pages of legal briefs and millions of words of argumentation about constitutional law.

For employers, of course, last week’s Supreme Court decision boils down to one word: compliance. Put simply, the compliance mandate timetable embedded in the healthcare reform law, as well as the federal government’s regulatory enforcement machine, is now fully operational.

Statutory provisions that were to have taken effect in 2011 and 2012, for example, such as the requirement to offer coverage to dependents up to age 26, and the ban on pre-existing condition exclusions for minor children, now have the Supreme Court’s constitutional green light.

Furthermore, employer compliance mandates due to take effect in 2013 will now come into force as scheduled.

These include W-2 reporting of the value of employer-sponsored health coverage; a $2,500 cap on FSA elections; a new, additional Medicare tax on employees that earn more than $200,000 per year; and a special employer reporting requirement to inform employees about the availability of state health insurance exchanges.

The Supreme Court decision also allows a blockbuster employer requirement to take effect as scheduled in 2014 alongside the individual mandate.

This is the so-called employer “Play or Pay” mandate that requires employers to offer “affordable” and “minimum value” coverage to full-time employees or face fines if employees qualify for federal tax credit subsidies to pay for coverage they purchase from state health insurance exchanges.

In many ways the Supreme Court has unleashed the full regulatory authority of the U.S. Departments of Health and Human Services, Labor, Treasury and IRS to implement the healthcare reform law as planned.

The good news is that the vast majority of employers haven’t been waiting for the federal courts to make up their minds about esoteric constitutional arguments. They have put in place comprehensive PPACA compliance plans to make sure their health plans reflect the letter and spirit of the law and regulations.

Up to now the PPACA mandates were fairly straightforward. With the help of their HR, Payroll and Benefits professionals and advisers, most employers have been able to decipher the new regulations and stay in compliance.

Starting in 2013, however, with W-2 reporting and the FSA cap, employer compliance will become more challenging. And the 2014 “Play or Pay” mandate could be the most difficult of all.

To be sure, the November elections could have an impact on PPACA and regulatory implementation. Republicans have vowed to “repeal and replace” the 2010 healthcare reform law. The Supreme Court’s validation of the individual mandate as a “tax” could further energize opponents of the law. 

While political change and a new healthcare reform law are always possible, from an employer compliance standpoint speculation about politics echoes theories about what the Supreme Court would ultimately decide.

Last week’s Supreme Court decision has finally cleared away the legal fog around the healthcare reform law. Employers can now see clearly the regulatory horizon before them. The next step is to get prepared to come into compliance with the new mandates—and stay in compliance.