Supreme Court Allows Affordable Care Act to Remain in Place

On June 28, 2012, the United States Supreme Court held that the Affordable Care Act (“ACA”) was not unconstitutional. The 5-4 decision found that the individual mandate (which requires all persons to have health care coverage or pay a penalty) was a tax and therefore was allowable under Congress’ constitutional power to levy taxes. The taxation argument was not the primary argument advanced by the government, as it previously had taken great pains to argue that the ACA was not a tax. The Supreme Court also upheld all of the other significant portions of this sweeping federal law.

Given this holding, the ACA will, within the next two years, extend health insurance coverage to millions of Americans who currently do not have coverage. Moreover, the current and future rules barring limitations as to preexisting conditions remain applicable. Beginning September 24, 2012, employees will have to be provided with a summary of benefits and coverage and, for some employers, the cost of health care coverage will be required to be reported on an employee’s W-2. Beginning in 2013, there will be additional taxes paid by highly compensated employees and those with significant investment earnings to support this law. Also, a number of other changes required by the ACA go into effect as of 2014, including imposing annual tax penalties on certain employers that do not offer health insurance to their full-time workers and on individuals who do not secure health insurance.

It is certainly likely that there will be many more challenges to the ACA, including interpretive rules that have been promulgated by various government agencies relative to doctor-owned hospitals, health insurance exchanges, Medicare panels and employers providing free birth control. It would appear that ongoing litigation and other challenges involving the ACA will not cease even with the Supreme Court’s decision.

While legislation to repeal the ACA will again be introduced in Congress, whether the ACA remains in effect will depend upon the next Congress and the presidential election in November. In the meantime, the ACA will continue to be a significant concern for employers, medical providers and insurance carriers.

Contact: Paul Jackson

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