Wednesday may be the stickiest part of the three-day hearings at the Supreme Court regarding health care reform’s individual mandate, as the issues being argued on this final day have the greatest potential to make HR/benefits managers lives — and those of the employees and families they serve — quite complicated. What is at hand today is the issue of “severability,” whether the entire Patient Protection and Affordable Care Act must fall if the insurance mandate is found to be unconstitutional, or if the other remaining parts of the law can survive.

When Congress adopts legislation, it sometimes includes a severability clause that allows other provisions to stand in case the courts strike down another part. However, PPACA contains no such clause. Thus, today’s arguments hold special importance. If the individual mandate is struck down and also found to be not “severable” from the remainder of the law, it means that when the unpopular mandate falls, all of the more popular provisions—including guaranteed issue, coverage for dependents up to age 26, prohibiting insurers from denying coverage to individuals with pre-existing conditions, and prohibitions on gender rating and lifetime benefit caps—will go down along with it.

However, if the mandate is severable from the rest of PPACA, employers still can opt to send workers to private exchanges to obtain health coverage, or reduce company-sponsored plans down to a 60% actuarial value. The latter would mean less rich benefits, but also depends on the essential health benefits regulations — a set of health care services that must be covered by certain health plans beginning in 2014 — which have yet to be released by the Department of Health and Human Services.

“It’s a challenging time for everyone, individuals, employers, health care providers — everyone is scrambling to situate themselves, while missing key chunks of information,” says Katharine Keefe, partner and head of the health care practice at law firm Dilworth and Paxson LLP, in an exclusive interview with EBN. How rich a benefit plan ends up being hinges on that missing chunk of information, which also has voluntary benefits providers scratching their heads.

“Whenever specific requirements are released will impact product design, how we look at our portfolio and where we see opportunities,” John Stanley tells EBN. Stanley is the chief marketing officer of Transamerica, which provides supplemental health products that currently ride on a supplemental medical reimbursement or indemnity model. If employers were to go for a less rich benefit design, he says the voluntary industry would be poised to fill in the gaps.

Those challenging the law argued in written briefs that the individual mandate is the heart of PPACA and is so critical to its operation that the entire law must be invalidated without the requirement to buy health insurance.

The Obama administration disagreed. It said Congress wanted the bulk of the law's provisions to operate independently of the mandate and many provisions already are in effect, including the requirement that insurers provide family coverage for adult children until age 26.

“There are many employers who view the law as an intrusion into the marketplace and an onerous burden. On the other side of the coin, if the law is upheld, there are new vehicles like health insurance exchanges that create new market places, which will create options for small businesses to secure coverage,” says Keefe. Whether or not employers maintain coverage will be determined by “how they value insurance coverage as a benefit, and how much of a burden it is to bottom line.”

The administration said only two provisions would have to fall if the mandate were struck down: one that bars insurers from refusing to cover a person because of a pre-existing medical condition and another that disallows them to charge higher premiums due to a person's medical history.

But some experts say the entire law won’t come down, primarily for economic reasons so that it doesn’t add further to the $15 trillion in public debt. “Pragmatically, the legislation, however, imperfect, must survive and continue,” says Michael Turpin, executive vice president of USI Insurance Services. “The legislation can't stand on its own feet as is, but I don't think the Supreme Court will abort the legislation before it is born. Defects and all, we will have to work together to get it right. There's no turning back because repeal is a more dangerous and unsustainable place for the nation.”

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