HOT TOPICS IN THE NEWS: JUNE 2012
S u p r e m e C ou r t R u li n g S o m e wh a t S u r p r i s in g
Yesterday, the U.S. Supreme Court (the “Court”) upheld the
constitutionality of the “Individual Mandate” contained in the Patient Understanding the Employer Mandate
Protection and Affordable Care Act (ACA), that many thought
Employers are not required by ACA to provide employees
would be overturned. While striking down the Commerce Clause
with health insurance. Beginning in 2014, however,
argument, the Court determined that Congress can impose the
employers with 50 or more “full-time” employees during the
individual mandate under the taxing provisions permitted to federal
previous calendar year could be subject to certain
government. Conversely, the Court overturned components of the
penalties. Under the ACA, full-time employees for meeting
required Medicaid expansion1 that most thought would be upheld.
this over-50 threshold is the sum of (a) any employee who
Legal scholars have no expectation of the Court revisiting issues
works more than 30 hours and (b) all full-time equivalents
associated with ACA, and even if a new president is elected later
(part-time monthly hours / 120). The full-time equivalents
this year, there is little likelihood that a full repeal could make it
are not included in the actual penalty calculations below.
through the Senate anytime in the near future. As a result, it
appears that ACA will be the “law of the land” for the foreseeable Employers that do not offer health coverage that meets the
future. minimum essential coverage requirement will pay a penalty
if at least one full-time worker receives a premium tax credit
In the ruling, the Court upheld the hundreds of other rules
and enters an insurance exchange. The employer would
embedded in the law designed to help more Americans obtain
pay a penalty of $2,000 for each full-time worker after
insurance and to refashion the healthcare industry. Now that the
exempting the first 30 full-time workers.
uncertainty has been removed; we recommend that organizations
revisit the impact that the law will have on their operations. Those employers that do not provide either (a) “affordable”
coverage (i.e., employee share of cost is less than 9.5% of
All organizations will need to understand and assess the “employer
household income) or (b) sufficient coverage (i.e., employer
mandate” portions of the ACA set to take effect in 2014.
covers more than 60% of covered expenses) will be subject
Healthcare providers should proceed with initial plans to adapt to to a penalty equal to the lesser of the formula above or
the changing enviornment resulting from the ACA. These include $3,000 for each full-time worker who enters an insurance
such provisions as: cuts to Medicare, the creation of the exchange.
Independent Payment Advisory Board (IPAB), transparency
An employer may be required to provide a “free choice
provisions, new quality programs, training requirements for certain
voucher” equal to the amount the employer would have
employees, bundled payments, and accountable care
paid towards the cost of an insurance plan to qualifying
individuals (based on poverty guidelines and employee
In the coming weeks, we will be addressing several of the ACA share) who also elect to purchase from an exchange.
provisions that will impact your business. For more information on
Employers with more than 200 full-time employees must
any of the following, a Moore Stephens Lovelace representative
automatically enroll employees into a health insurance
will be happy to assist your organization. Please contact us at
plan. Employees would be required to opt-out.
The provisions of the ACA require states to increase the eligibility for Medicaid benefits to include individuals up to 133% of the
federal poverty guidelines. Federal funding would cover 100% of the increase in costs through 2016. Thereafter, states would be
responsible for a share of the increased costs. The ACA proposed that states that did not increase the eligibility to the required level
would lose all federal Medicaid funding. The Supreme Court ruled that it would be unconstitutional for the federal government to
penalize the states by withholding Medicaid funds for existing programs for noncompliance with the expansion provisions. It is too
early to tell how the federal government will attempt to enforce the law and which states will elect to expand their Medicaid levels
to the required levels.
Celebrating Over 38 Years of Excellent Client Service
Where caring still counts… www.mslcpa.com