• Health Care Reform Upheld
  • July 3, 2012
  • Law Firm: Troutman Sanders LLP - Atlanta Office
  • The individual mandate under the Patient Protection and Affordable Care Act, that most Americans buy health insurance, is constitutional according to the much-anticipated ruling issued by the U.S. Supreme Court today.

    The Supreme Court today upheld the constitutionality of the individual mandate under Congress' taxing authority. In a five to four ruling, the Court reasoned that the penalty an individual must pay if he or she refuses to buy health insurance is, at its core, a tax that may be imposed by Congress.

    The Court also upheld the enhanced Medicaid eligibility requirements imposed on States, provided that States that do not comply with the new requirements may only be deprived of new Medicaid funds payable under the Act and not their existing Medicaid funds payable by the federal government to cover their costs incurred in offering existing Medicaid coverage.

    As a result of today’s ruling, employers and plans must begin to prepare promptly to comply with requirements imposed by the Act, including for example:

    • as early as September 23, 2012, issuing a uniform Summary of Benefits and Coverage for each group health plan;
    • by January 31, 2013, reporting the value of employer-provided health care coverage on each employee’s 2012 W-2;
    • effective for plan years ending on or after October 1, 2012, for self-insured health plans, paying a $2 fee ($1 fee in the case of plan years ending during 2013) per covered person to the Patient-Centered Outcomes Research Trust Fund;
    • effective for Plan Years beginning on or after January 1, 2013, limiting employee contributions to health care spending accounts to an annual maximum of $2,500; and
    • beginning January 1, 2013, increasing the employee portion of the hospital insurance portion of the OASDI (Medicare) tax to 2.35% (from the current 1.45%) for wages over $200,000.

    An additional wave of requirements is set to become effective for plan years beginning on or after January 1, 2014.