Health Care Reform Update: Supreme Court Ruling Mandates Timely Employer Actions

The Supreme Court’s decision in National Federation of Independent Business v. Sibelius upholding the Patient Protection and Affordable Care Act (PPACA) leaves in place the market reforms and tax provisions that have become effective under health care reform over the last two years and gives a green light to the continued implementation of these measures. All health plan sponsors and administrators should continue to take action to comply with these requirements as they become effective. Employers whose plans fail the PPACA’s minimum standards of coverage or affordability should consider restructuring their benefits to avoid heavy penalties.

Majority Opinion Upholds Individual Mandate

The majority opinion, written by Chief Justice John Roberts, found that the requirement imposed by PPACA to maintain minimum essential health insurance coverage or make a “shared responsibility payment,” while outside Congress’ authority under the Commerce Clause, could be read in a manner that comports with Congress’ power to tax and spend. The Court also found that the authority given to the Secretary of Health and Human Services (HHS) to withhold all federal Medicaid funding from states that failed to expand Medicaid eligibility in accordance with PPACA exceeded Congress’ power under the Spending Clause, but could be severed from the rest of the statute so that only new Medicaid funds are conditioned on a state’s compliance.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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