The Supreme Court Largely Upholds PPACA
Yesterday, the U.S. Supreme Court
upheld the individual mandate and most of the Patient Protection and Affordable
Care Act (PPACA). As expected, it was a close decision -- 5-4 -- with
Chief Justice Roberts and Justices Breyer, Ginsburg, Kagan and Sotomayor
agreeing that the individual mandate is a permissible tax. Because the
individual mandate was found to be acceptable, most of the rest of the law
(including the exchanges and the requirement that larger employers provide
minimum coverage or pay penalties of their own) automatically stands. For
additional information on the decision, CLICK HERE.
Because PPACA has been upheld,
employers need to move forward with implementing the changes required by the
law. The most immediate requirements are:
- All group health plans,
regardless of size, must provide "summaries of benefits
coverage" (SBC) with the first open enrollment beginning on or after
Sept. 23, 2012. The content and format of these SBCs must meet
strict guidelines, and the penalties for not providing them are high (up
to $1,000 per failure). Insurers will be expected to provide the
SBCs for fully insured plans, while self-funded plans will be responsible
for preparing their own.
--- - Employers that issued 250 or
more W-2s in 2011 must report the total value of each employee's medical coverage
on their 2012 W-2 (which is to be issued in January 2013).
--- - High income taxpayers (those
with more than $250,000 in wages if married and filing jointly, or more
than $200,00 if single) must pay additional Medicare tax, and employers
will be responsible for deducting a part of the tax (an additional 0.9
percent on the employee's wages in excess of $200,000) from the employee's
pay beginning in 2013.
--- - The maximum employee
contribution to a health flexible spending account (FSA) will be $2,500 beginning
with the 2013 plan year.
--- - The Patient Centered Outcomes fee (also called the comparative effectiveness fee) is due July 31, 2013. The fee is $1 per covered life for the 2012 year. Insurers will remit the fee on behalf of the plans they cover, while self-funded plans will pay the fee directly.
Politically, while House
Republicans have pledged to repeal PPACA, it is unlikely a repeal bill would
pass the Senate, and it would be vetoed in any event by President Barack
Obama. The fall elections, of course, could result in a change in control
of Congress and/or the White House, and Republican victories would likely
re-energize efforts to repeal PPACA or to discontinue funding needed to
implement various parts of the law.
The opinion is long (193 pages) and
complex, and we will provide additional details -- through both written alerts
and a webinar -- once there has been more time to study the opinion.