Supreme Court Upholds Individual Health Insurance Mandate

July 1, 2012

The U.S. Supreme Court announced its much-anticipated decision on the Obama administration’s health care reform law on June 28, 2012, ruling 5-4 that the controversial individual mandate, which requires virtually all Americans to buy health insurance, is constitutional. The Court upheld the individual mandate provision as valid under Congress’ taxing authority. The Court reasoned that the ACA’s “requirement that certain individuals pay a financial penalty for not obtaining health insurance may reasonably be characterized as a tax.” The Court struck the ACA’s attempt to expand Medicaid as unconstitutional. The Court held that Congress cannot penalize states that choose not to join in the expansion of Medicaid coverage by taking away their Medicaid funding already in place.

Employers must begin now to prepare to comply with the ACA requirements that take effect in 2012, 2013 and 2014 and things to be aware of the following:

* Employers are required to provide employees with a federal agency approved easily understood summary of benefits and explanation of coverage (SBC) generally prior to enrollment beginning on September 23, 2012.

* Employers that file 250 or more W-2s in 2011 or in a calendar year after 2011must report beginning in 2013 (for calendar year 2012) to the Internal Revenue Service (IRS) the total cost incurred by the business and provided to each employee on the employee’s W-2.

* Employers with 50 or more full-time employees that do not offer coverage generally will be assessed a penalty of $2,000 per full-time employee (minus the first 30 employees); employers with more than 200 employees are required to automatically enroll employees into health insurance plans offered by the business all starting January 1, 2014.