By Eric Paltell
On June 28, 2012, the Supreme Court upheld “Obamacare” (officially known as the Patient Protection and Affordable Care Act of 2010). National Federation of Independent Business et al. v. Sebelius, No. 11-393 (June 28, 2012). In a 5 to 4 decision, Chief Justice John Roberts wrote that the law is constitutional as an exercise of Congress’ power to tax, notwithstanding the fact that it was an impermissible exercise of Congressional Power under the Constitution’s Commerce Clause and the Necessary and Proper Clause. As a result, the changes made by the health care reform law to the Employee Retirement Income Security Act of 1974 (“ERISA”), Internal Revenue Code of 1986 (“Code”), and other statutes will take effect as scheduled, and employers need to get ready to comply. Here is a summary of the key provisions affecting employers that will now begin to take effect (the PPACA already requires plans to provide coverage for children up to age 26, provide specific preventive care benefits on a first-dollar basis, and supplement the claim procedures already required under ERISA):
- Play or Pay.Each employer with 50 or more full-time employees will have to either provide at least a specified minimum level of health coverage or pay a penalty beginning in 2014.
- Restrictions on Benefit Limits.Employer group health plans are prohibited from imposing lifetime or annual limits on benefit amounts, waiting periods in excess of 90 days, and pre-existing condition limitations.
- Tax Reporting.Employers must report the annual cost of health coverage on each employee’s W-2.
- Limits on FSA’s.Health care flexible spending accounts are capped at $2,500.
- Non-discrimination.Insured group health plans cannot discriminate in favor of highly compensated individuals in providing coverage and benefits.
- Automatic Enrollment. Beginning in 2014, employers with more than 200 full-time employees are required to automatically enroll new full-time employees in group health plans.
Of course, there is also the controversial “individual mandate,” which requires individuals to purchase health coverage or pay a tax penalty and increases the Federal Income Contributions Act (“FICA”) tax on individuals with compensation in excess of $200,000 (and married couples making in excess of $250,000).
At this point, it seems that the only thing that will preclude the changes from taking effect will be a Mitt Romney victory in the November election. Barring that, employers need to prepare for a new health-care landscape.