US Supreme Court Decision on Healthcare Reform

As most of you know, the US Supreme Court announced on June 28, 2012, their decision on the constitutionality of the health care reform law (Patient Protection and Affordable Care Act of 2010 as amended by the Health Care and Education Reconciliation Act of 2010).The Court determined that the laws are, indeed, constitutional. So, that begs the question – what do businesses with and without healthcare benefit plans do now?
The first thing to keep in mind is that the mandate for healthcare coverage does not begin until 2014 – that’s not only 18 months away, but also a general election away. So, while we cannot ignore the mandate, we also need not look at draconian changes in our current plans because significant changes may be made in the next session(s) of Congress.

That being said, there are items that need attention. 

  • The changes already implemented remain – no pre-existing conditions, no lifetime spending caps, retaining adult children on an existing plan until age 26, and full coverage for certain preventive care benefits.
  • However, this year requires that organizations include the annual cost of health coverage on each employee’s W-2. There will also be a per plan participant fee required to be paid to the government.
  • Plans with open enrollment occurring after September 21, 2012, must provide a summary of benefits and coverage (Summary Plan Description) no later than the first day of open enrollment.
  • Tax-free reimbursements for over the counter drugs is eliminated.
  • Maximum healthcare flexible spending account limit is $2,500.00 in the next plan year.
  • Eliminates employer tax deductions for retiree prescription drug plan costs for employers receiving a related subsidy.
  • Benefit plans that discriminate in favor of highly compensated employees are barred. (Waiting for input from IRS on this one.)

The mandates for individual or employer coverage (or penalty) for employers with 50 or more fulltime employees will not become effective until 2014. Automatic employee enrollment in plans will not be mandated until 2014, as well. Another change that is stated to occur at that same time is the FICA tax for individuals with more than $200,000 in compensation will increase.

While no immediate action is required, it is prudent for employers with company provided employee health benefit plans begin to work closely with their benefit brokers to plan for the coming changes. Even though there may be a true “fruit basket turnover” in the 2013 legislative year regarding these laws, last minute planning rarely creates good results.