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Health reform law: Supreme Court upholds ACA — What it means for employers


health reform law

If you’ve held off on implementing changes to your organization’s health benefits until the Supreme Court rules on the health care reform law, it’s time to get busy.

The U.S. Supreme Court today upheld the constitutionality of the Affordable Care Act (ACA), including its controversial heart —the “individual mandate” that requires almost all Americans to have health insurance coverage by 2014 or else pay a fine.

The Court’s ruling puts to rest for now uncertainly about how health insurers and HR pros who handle health benefits should proceed. A long list of milestones for implementing the ACA were established when the law was enacted in March 2010, and they remain in full force.

The Society for Human Resource Management issued a statement saying, “Today’s court decision upholding the Patient Protection and Affordable Care Act leaves no doubt that insurers and employers will move ahead to fully implement the law.”

“While we expect political debate to continue over health care reform, employers are advised to keep moving forward with implementing ACA and its governing regulations,” said Cara Woodson Welch, vice president of public policy at the nonprofit organization WorldatWork.

If you were waiting to jump into “compliance mode” on the Affordable Care Act, today’s landmark Supreme Court decision will force your organization to kick your planning into high gear. Get started July 12 with The Supreme Court Health Care Ruling: What Employers Need to Do Now — our interactive webinar that will spell out the compliance steps you must be ready to take right away.

Several short-term deadlines are approaching:

This year

•    Starting Aug. 1, health insurers that don’t spend at least 80% of the premiums they collect on health care delivery will have to issue rebate checks to policyholders. Your insurance carrier or broker will know how this ACA requirement will affect your employees.
•    For plan years beginning on or after Sept. 23, employers must provide employees with a plain-English “summary of benefits and coverage” (SBC) statement that explains their benefits and defines basic health insurance and medical terms. Your carrier or broker can point you toward government-approved templates and compliance advice.
•    Employers must begin planning right away to comply with a requirement to report the value of employees’ health benefits on 2012 W-2 tax statements to be distributed early next year. The IRS is still working out the details. Consult your tax advisor to learn your compliance obligations.


Next year’s ACA requirements will be relatively easy on employers, with most regulatory attention focused on preparing to set up state insurance exchanges, which are supposed to allow many Americans to buy more affordable health insurance coverage.


The real ACA action begins in 2014, when the individual mandate kicks in and state insurance exchanges go live. That’s also when employers begin facing big penalties if they don’t offer health insurance.

More information from The HR Specialist

Webinar: “The Supreme Court Health Care Ruling: What Employers Need to Do Now”
July 12, 1:00 p.m. ET
Learn how the Supreme Court’s ruling affects your organization … and how you should respond. Which specific steps should your organization take now to get in compliance and plan for the future?

Background: HR Specialist information on the history of the health care reform law, including compliance timelines and a link to the law itself

Latest updates: Analysis of the Supreme Court’s decision and its effect on employers


Health reform law: The Supreme Court’s decision


The U.S. Supreme Court is expected to rule by the end of June 2012 on a challenge to the sweeping federal health-care reform law enacted in 2010. The case addresses the constitutionality of the Obama administration’s signature domestic policy achievement. No matter how the High Court rules, its decision could affect HR and employee benefits for years to come.

If the court strikes down the Affordable Care Act (ACA), expect the employer-provided health insurance landscape to remain largely as it has for the last 50 years. If the court affirms it, the ACA’s ambitious timetable for revamping the nation’s health insurance system will continue.

The ACA—which requires almost all Americans to have at least basic health insurance coverage by 2014—has been challenged four times this year in federal appeals courts:

  • Two panels said the law passes constitutional muster.
  • One said it was too soon to decide the question.
  • A fourth ruled parts of the law unconstitutional.

The Supreme Court heard the the government’s appeal of the last case, an August decision by the 11th Circuit Court of Appeals in Atlanta. That case was originally filed by attorneys general from 26 states.

The Justices will decide four questions from the 11th Circuit case:

1. Does Congress have the authority to require individuals to purchase health insurance—the so-called individual mandate? Under the ACA, those who don’t have at least minimal coverage by 2014 would be required to pay a penalty on their 2015 federal income tax returns.

2. If the Supreme Court decides that the individual mandate is unconstitutional, can the rest of the law stand? The government concedes that many of the ACA’s provisions, such as requiring insurance companies to cover everyone, will not be financially feasible unless everyone actually has insurance.

3. Is it unconstitutional for Congress to require states to expand (and pay for) Medicaid health coverage for those too poor to afford it on their own? The ACA requires states to offer Medicaid coverage to individuals and families with incomes equal to or less than 133% of the federal poverty level.

4. Is it premature to even address the first three questions? The government has argued that the ACA’s noncompliance penalties amount to a tax. (Opponents of the law dispute that.) If the Supreme Court agrees that the penalties are taxes, then it could rule that the ACA’s constitutionality cannot be decided until someone has to pay the tax in 2015.

It is notable that the Supreme Court chose not to address ACA provisions that would force large private-sector employers and government employers to provide health insurance benefits to employees by 2014. That “pay or play” mandate would require employers with 50 or more employees to provide affordable bare-bones health coverage to full-time employees or else pay a penalty. Instead, the court will focus on the larger implications of the law: federal versus state power. 

For more analysis of the legal issues involved in the case, click here.

Read the Supreme Court’s docket information on the case here.