By: Melanie Berkowitz, Esq.
News of the Supreme Court’s 5-4 ruling on the Patient Protection and Affordable Care Act (ACA) caused initial confusion in the press and social media sphere.
The dust has settled on the complex Supreme Court decision, which found the law largely constitutional. We'll take a closer look at its implications for employers and their workers.
Healthcare Reform Evolves
When we first reported on healthcare reform more than two years ago, the staying power of its mandate that nearly all individuals obtain health insurance by 2014 was extremely uncertain.
That uncertainty has been eliminated with a 193 page opinion by Chief Justice John Roberts.
The requirement that employers with over 50 employees provide health insurance to their workers and other related directives were not specifically at issue before the Court. Yet most experts agreed that if the individual mandate was declared unconstitutional the remainder of the law would likely collapse as well.
Republican leaders have vowed to immediately take steps to have the law repealed in Congress, but for now, employers should conduct their business and make plans under the assumption that the law is valid and will go into full effect in 2014 -- only eighteen months from now.
What Did The Supreme Court Decide?
The Obama administration primarily argued that Congress has the power to require all Americans to obtain health insurance under its power to oversee commerce.
The Court rejected this “Commerce Clause” argument but instead found that under Congress’ authority to tax, it could validly penalize any individual who could afford to buy health insurance but did not do so.
The Court also found that the dispute was ready to be decided now -- even though the penalty on those who do not buy health insurance will not go into effect until they submit their 2015 tax returns.
What Happens to Medicaid?
The Court held that the section of the law requiring the states to expand their Medicaid offerings to a wider population was also valid. However, the justices struck down the law’s threat to withdraw current Medicaid funding to states that decline to expand coverage to more individuals.
Some experts predict that conservative-leaning states might continue to reject Federal funds and leave the poorest member of their population without health coverage.
Where Does This Leave The Employer Mandate?
The employer-centered requirements were designed to support the individual mandate by making it easier for working Americans to obtain affordable healthcare. Employers that have been waiting out the fight before making the changes required by the ACA will now have to scramble to be in compliance by 2014.
For purposes of providing health insurance, the law roughly divides employers into three categories:
Companies with under 50 employees:
So-called “small” employers do not have to provide health insurance to their employees under the ACA. If a small employer does wish to offer health coverage to employees, it will have new options under the law.
Starting in 2014, states will be required to set up health insurance “exchanges” for those employers who choose to provide health care. Thismandate will require insurers to compete for business and allow smaller companies and individuals to band together to increase their purchasing power.
Companies with 50 -- 199 employees:
Mid-sized employers must provide an affordable health insurance plan to their employees or face penalties.
If an employer either does not offer health insurance at all, or offers insurance that is deemed “too costly” for employees to buy -- and even one employee chooses to seek health insurance through an exchange instead -- the employer will be subject to the penalty.
Companies with 200 or more employees:
Large employers must immediately enroll all new employees in their health insurance plan, subject only to any legally-mandated waiting period.
The penalties for failing to offer insurance, or for offering insurance that is too costly, apply to these employers as well.
What Should Employers Do Now?
ACA guidelines and explanations are expected to be released by government agencies in the coming weeks and months.
In the meantime, here is what all employers and business-owners, no matter what size, should do to prepare:
- Familiarize yourself with the sections of the law that apply to your business, including applicable guidances;
- Prepare to educate your workforce on how the ACA will affect their employer-provided health insurance;
- Audit your current health insurance plan for compliance with the ACA and identify changes that will need to be made before 2014;
- Consider implementing or offering “healthy workforce” programs that will encourage your employees to make smart choices regarding their health;
- Investigate alternatives to traditional insurance programs (such as the new health insurance exchanges) as a way to keep costs down.
Legal Disclaimer: None of the information provided herein constitutes legal advice on behalf of Monster.