U.S. Supreme Court upholds Health Care Law

What every business needs to know now Elizabeth H. Latchana and Samantha A. Kopacz Fraser Trebilcock On June 28, 2012, the U.S. Supreme Court issued an historic ruling and upheld the Affordable Care Act (the ''ACA''), which became law on March 23, 2010. The majority opinion, a 5-4 decision in National Federation of Independent Business v. Sebelius, (Sup. Ct. 6/28/2012), was written by Chief Justice Roberts. The ACA created sweeping reform to the health care system in the United States. The driving principles behind the ACA are to provide affordable health care to all Americans, reduce the growth of the health care costs and improve the health of our communities. At the heart of the Court's ruling was a determination that the individual mandate of the ACA is constitutional. The individual mandate requires nearly all Americans to purchase and maintain health insurance or else pay a tax. The Court determined that the penalty associated with the individual mandate is a permissible tax that can be imposed by Congress under its taxing power. The ACA also required that States comply with new eligibility requirements for Medicaid or risk losing their federal funding. The Court struck down, as unconstitutional, the ability of the Secretary of Health and Human Services to withdraw existing Medicaid funds from a State that fails to comply with the requirements set out in the expansion. It is important to note that with the ruling, the health care industry will have some relative certainty going forward to implement the plans it had drawn since the law was enacted. The States will now need to move forward to implement those provisions they are obligated to undertake. While there may be Congressional skirmishes and efforts to amend or repeal the law, for now the message is that Congress has spoken--Health Care Reform survives. The Court's Ruling and its Impact on Group Health Plans The Court held that the individual mandate is constitutional under Congress' taxing authority, despite the fact that the mandate does not pass constitutional muster under the Commerce Clause. Because this mandate was upheld, the entirety of the ACA as it affects group health plans remains unchanged. Group health plans have faced significant new challenges under the lengthy and complex ACA. The law has drastically changed health care as we know it, and its requirements demand immediate action and ongoing analysis and restructuring of benefits in the years to come. While there are variations for some of these requirements, such as a plan's grandfathered status or whether a particular benefit is deemed excepted under HIPAA's portability requirements, the group health plan requirements generally include, but are not limited to, the following: Mandates currently in effect * Coverage of Adult Children up to Age 26 * Lifetime Benefit Limits and Restricted Annual Benefit Limits * Limited Grounds for Rescinding Coverage * Prohibition of Preexisting Conditions Exclusions (Under Age 19) * Internal and External Claims Appeals Processes * Mandated Coverage of Preventive Health Services * Mandated Patient Protections * Reasonable Break Time for Nursing Mothers * Over-the-Counter Drug Prohibition * HSA and Archer MSA Penalty Increase Mandates coming into effect for 2012-2013 * Uniform Summary of Benefits and Coverage * Restricted Annual Benefit Limits ($1.25 million for 2012; $2 million for 2013) * Flexible Spending Account Limit to $2,500 * Cost of Employer-Sponsored Health Coverage Included on Form W-2 * Elimination of Deduction for Expenses Allocable to Medicare Part D Subsidy * Employer Annual Reporting Requirements Regarding Quality of Care * Extension of Nondiscrimination Rules to Fully Insured Plans (Delayed Effective Date) * Comparative Effectiveness Fee (Patient-Centered Outcomes Research Trust Fund) Mandates coming into effect for 2014 and beyond * Prohibition of Preexisting Conditions Exclusions (For All) * Pay or Play (Employer Shared Responsibility for Not Offering Coverage or Offering Coverage that is Unaffordable or Under a Specified Threshold) * Automatic Enrollment for Large Employers Offering Coverage (Anticipated Delay Until Regulations Released) * Prohibition on Annual Benefit Limits * Prohibition on Excessive Waiting Periods (Exceeding 90 Days) * Individual Mandate * Exchanges * Fair Health Insurance Premiums * Reporting of Health Insurance Coverage * Transparency in Coverage * Coverage for Clinical Trials * Comprehensive Health Insurance Coverage * Guaranteed Availability and Renewability of Coverage * Nondiscrimination in Health Care Providers * Nondiscrimination Based on Health Status * Increase Wellness Incentive Limit * Excise Tax on Cadillac Plans There are various complexities associated with each of the above provisions, with specific definitions, exceptions, and requirements. However, as the ACA's complexities have voluminous past, present and future obligations on group health plans, plans sponsors and plan administrators should immediately have their plan design, procedures, and administration thoroughly reviewed. For more information, contact: Elizabeth H. Latchana at elatchana@fraserlawfirm.com or Samantha A. Kopacz at skopacz@fraserlawfirm.com or visit www.fraserlawfirm.com Published: Thu, Jul 5, 2012

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