On the last day before summer recess, the United States Supreme Court handed down its ruling in the much anticipated “ObamaCare” case. Despite being difficult to follow without the assistance of a roadmap, the result of the nearly 200-page ruling is that health care reform will proceed largely as planned. In the aftermath, many are left wondering, what now?
Ordinarily there is little disruption when the Supreme Court upholds a law because the status quo has been preserved. This is far from the case with the Patient Protection and Affordable Care Act (Act). The political excitement and division surrounding the Act left many unsure about whether looming changes to our health care system would ever become a reality.
Consequently, many are now desperately behind in terms of planning and preparing for the (apparently?) inevitable changes. In other words, it is crunch time for those who were expecting the Supreme Court to strike down ObamaCare.
To stay current, employers and individuals must become familiar with the changing landscape. Specifically, it is important to posses a minimum understanding of the current and future changes under the Act, such as:
- the requirement that all individuals, with some exceptions, have health insurance;
- the prohibition of lifetime benefits limits based on dollar amounts;
- the prohibition of coverage rescissions or cancellations, except in cases of fraud or intentional misrepresentation;
- the requirement that dependent insurance coverage continue up to the age of 26;
- the prohibition of pre-existing condition exclusions for dependent children under the age of 19; and
- the limitation on medical expense contributions to flexible spending accounts to $2,500 per year.
For individuals, many of the Act’s provisions require little or no preparation. The same cannot be said for employers, since various requirements under the Act require preparation, such as:
- Mandatory Offer of Coverage: Employers with 50 or more employees may be assessed a $2,000 penalty (or tax, according to the Supreme Court) per full-time employee (in excess of 30 employees) if they do not offer coverage and if they have at least one employee who receives a premium credit through an exchange. Such employers offering coverage but having at least one employee receiving a premium credit through an exchange may face a $3,000 penalty for each full-time employee.
- Automatic Enrollment: Employers with more than 200 employees are required to automatically enroll their employees into employer-offered health insurance plans; however, employees may be able to opt out of coverage.
- Nondiscrimination Requirements: Under the Act, certain non-grandfathered group health plans (other than self-insured plans) cannot discriminate in favor of highly compensated employees in terms of benefits, eligibility or premium subsidies. Violations can result is severe penalties and taxes. (Note: Implementation of the nondiscrimination requirements has been delayed to allow for the issuance of additional guidance.)
- Health Insurance Exchanges: Exchanges will provide marketplaces for individuals and small employers with up to 100 employees to directly compare available private health insurance options on the basis of price, quality, and other factors.
- Tax Reporting Requirements: The Act requires employers to report the value of health care benefits on employee’s W-2 tax statements.
It is worth noting that not all of the Act’s provisions survived judicial scrutiny. For example, the Supreme Court limited the expansion of Medicaid by giving states some flexibility to not expand their Medicaid programs without paying the same financial penalties set forth in the Act.
Despite the Supreme Court’s landmark ruling, significant questions remain about how various provisions of the Act will be implemented, maintained and enforced. This makes it vitally important for businesses to maneuver through the developing law and stay ahead of the curve.
Those continuing to hold out hope for some kind of legislative or judicial relief from the Act should not delay their preparations any further. The time is now. Those needing to adapt their practices to comply with the Act should begin doing so immediately; otherwise, they may soon find themselves drowning in the coming sea of change.
At Setnor Byer Insurance & Risk, we are committed to guiding you through what is sure to be a bumpy ride. Check back with us periodically for future informational updates. If you have specific questions about the Act or if you are ready to take action and would like to see how Setnor Byer Insurance & Risk can help, contact us.