In one of the most anticipated decisions in decades, this morning the U.S. Supreme Court held that the Patient Protection and Affordable Care Act of 2010 is constitutional.  The Court upheld virtually every part of it.  The most controversial and discussed aspect of the law, the “individual mandate” to purchase health insurance or pay an annual penalty, survived even though many observers believed that the court would strike it down.  The Court's rationale:  the penalty is itself a tax and therefore within the power of Congress to impose. 

The Supreme Court views the individual mandate to purchase insurance as a tax, which it upheld as constitutional.

Chief Justice John Roberts authored the majority opinion, and the vote was a narrow 5-4 in favor of the Act.  Justice Anthony Kennedy wrote the dissenting opinion in which he states that four of the nine justices would have struck down the law in its entirety.  The name of the case is National Federation of Independent Business v. Sebelius (see pdf at HealthCare_Constitutional.pdf). 

The effect of the Court’s decision:  all existing provisions of the Act, such as the coverage of adult children up to age 26 and the prohibitions on lifetime benefit limits, remain in effect.  More importantly, the penalties on larger employers for failing to provide minimum essential coverage and availability of coverage through government-sponsored exchanges will become effective as scheduled, on January 1, 2014.

More importantly, the penalties on larger employers for failing to provide minimum essential [health care] coverage. . . will become effective. . . 

Employers and insurers who had been anxiously awaiting the decision must now begin planning their compliance efforts over the next 18 months, unless Congress repeals some or all of the Act following the November elections. 

Stay tuned, we will have more in the coming days!  Early next week, we will issue a longer bulletin about what requirements are coming in 2014 now that the Court has upheld the Act as constitutional.

Also, on July 12, at 2 pm Eastern, ERISA attorneys Dana Thrasher and Bob Ellerbrock will conduct a webinar on what to do now with respect to employer health plans.  Registration information will be available soon on our firm website.