The wait is over as the Supreme Court today upheld the Patient Protection and Affordable Care Act, paving the way for employers to continue meeting the legislation’s provisions that come into effect this year and beyond.
From a communications standpoint, this is the easiest verdict for employers to deal with, says Jen Benz, chief strategist and founder of Benz Communications in San Francisco. “This will be all over the media. I don’t think employers need to do a special communication about the Supreme Court decision,” she says. “Only companies that have been doing a lot of communication on health care reform and minute-by-minute updates would need to be compelled to say anything about it.”
“No one has to go back and explain what is changing or what isn’t changing,” Benz continues. “It’s now status quo: What’s been communicated already remains and companies can really just go on business as usual the way they’ve been implementing health care reform.”
For those employers who were taking a wait-and-see approach to compliance, it’s time for the real work to begin, according to Sandy Feingerts, an attorney with Fisher & Phillips. “I think a lot of employers have been sitting on the sidelines, not focusing on the Act and what they’re going to have to do in 2014 when the heavy issues come up,” she says. It’s time, she continues, for employers to focus on their obligations under the Act “because the only way this could be repealed is if Congress would repeal it. You’d be looking at a repeal to get rid of it because there are no longer any constitutional issues.”
Adam Bruckman, president and CEO of Digital Insurance, an insurance agency focused primarily on the small- to medium-sized employer market, says he wasn’t that surprised by the Court’s decision and agrees that today’s outcome is probably the least disruptive for employers. “Maybe when I digest the decision I might be surprised but I haven’t let myself think that there might be a major overhaul,” he says. “For the most part, nothing really changes for [employers] today.”
PPACA’s individual mandate requires most Americans to have adequate health coverage starting in 2014 or pay a penalty. Also in 2014, employers that fail to offer full-time employees and their dependents affordable coverage will face penalties.
“Employers can expect a spike in plan enrollment for 2014 as a result of the individual mandate,” said David Rahill, president of Mercer’s health and benefits business in a statement. “But they may see enrollment level off once the state exchanges become operational.”
In the near term, employers must also report the value of employer coverage on IRS Form W-2, cap dollar limits on health care flexible spending arrangements, and increase Medicare withholding for employees earning more than $200,000 per year. Employers must also comply with the reforms already in effect, such as coverage of dependents up to age 26.
“Any employers who have not yet conducted a ‘health care reform check-up’ should make that their first order of business,” said Sharon Cunninghis, senior partner and leader of Mercer’s U.S. health and benefits business.
According to Amy Howe, a partner with law firm Goldstein & Russell in Washington, D.C. and editor of SCOTUSblog, “because the mandate survives, the Court did not need to decide on what other parts of the statue were constitutional, except for a provision that required states to comply with new eligibility requirements for Medicaid or risk losing their funding. On that question, the Court held that the provision is constitutional as long as states would only lose new funds if they didn’t comply with the new requirements, rather than all of their funding.”
The Medicaid part of the Court’s decision came as a bit of a surprise to Jane Jensen, senior consulting actuary at Towers Watson in Denver. “The states being able to decide whether or not they’re going to participate in the Medicaid expansion will potentially have some impact for employers who have low income employees,” she says. Those employers may have been looking at the expansion “as a way to have a more generous offering” and may lose out if their states choose not to participate in the expansion.
Bruckman says while the Supreme Court’s decision is significant, the legislation doesn’t address rising health care costs and “we’ve got to work closely with our employer clients to help them find solutions to deal with that.”
