Today the U.S. Supreme Court issued its long-awaited decision on the Patient Protection and Affordable Care Act (ACA). In what is easily the most significant decision this term, and arguably one of the most important rulings in decades, the Supreme Court upheld the so-called "individual mandate" and all of the provisions of ACA that impact employers. NFIB v. Kathleen Sibelius, Secretary of Health and Human Services.
While the political impact of this ruling may be far from certain, the impact on employers is clear – it's time to get to work. Anticipating that the Supreme Court would invalidate much or all of ACA, many employers have been sitting on the sidelines and putting off investing much time or energy into analyzing how healthcare reform will impact their businesses. Now that the uncertainty has been lifted, it is time for employers to focus on the many healthcare reform compliance obligations and possible economic impacts.
"Big Ticket" Items for Employers
Of all the employer obligations in ACA, those that are likely to have the most significant impact on plan design and costs will become effective in 2014 or shortly thereafter:
The Employer "Play or Pay" Mandate: While much of the focus recently has been on the individual mandate, the more important mandate for employers is the "play or pay" mandate, which will require large employers (generally, those with 50 or more full-time employees taking into account full-time equivalents) to provide adequate and subsidized group health plan coverage to all full-time employees and their families beginning in 2014. If an employer fails to satisfy this requirement, it will be subject to a penalty - generally, $2,000 per full-time employee per year. This could have a significant economic impact on many employers. Accordingly, it is very important for employers to start modeling how this mandate will impact their bottom line starting in 2014. New Nondiscrimination Requirements: ACA prohibits most insured group health plans from discriminating in favor of highly-paid employees. If an employer's plan fails to satisfy this requirement, the employer will be subject to significant financial penalties. Implementation of this requirement has been delayed to give regulators time to issue guidance. However, it is expected that this requirement will begin applying in 2014 or shortly thereafter. If you are offering different plans, eligibility periods, or premium subsidies to different groups of employees...