The Supreme Court ruled on the landmark Affordable Care Act (ACA) case, King v.
Burwell in June 2015. While fears of change might have been quelled by this decision,
businesses owners should strive to understand this case and its potential impacts
in anticipation of future modifications.
According to recent surveys, employer awareness of the recent Affordable Care Act
(ACA) Supreme Court case was minimal, and employer understanding of the final decision
was even lower. While the King v Burwell Supreme Court case may be over, businesses
owners should be mindful of its implications, and of the inevitability of more ACA
amendments and health care reform-related changes to come.
What was the argument?
The King vs. Burwell Supreme Court case debated the legality of who is eligible
to receive federal subsidies for health insurance in states where exchanges are
run by the federal government as opposed to run by the state. Subsidies are available
for low to moderate-income people who could not afford to purchase health insurance
on their own and whose employer did not offer affordable, minimum essential coverage.
The argument hinged on a phrase used in the law itself – “established
by the State” – and whether subsidies were meant to be bought only by
people in marketplaces that had been set up by their state. Thirty-four states opted
to not set up state health insurance exchanges, instead residents purchase insurance
through the federal exchange, HealthCare.gov. Those 34 states were at risk of losing
access to these subsidies (aka premium tax credits).
What was the outcome?
In June 2015, the Supreme Court voted 6-3 to keep the law as is – meaning
eligible people can receive federal subsidies to purchase health care insurance,
regardless of whether their state government or the federal government runs their
health care exchange.
How does this affect individuals?
The ruling allows more than 6 million people to continue to receive federal subsidies
(Mercer). Had the ruling gone the other way, individuals would have had to support
the cost of increased health insurance premiums.
Is this good or bad news for employers?
Eligible employees working fewer than 30 hours per week continue to have access
to health insurance subsidies. Employers may continue to rely on subsidized health
insurance subsidies so their employees can have health insurance.
If the ruling had gone the other way, businesses in states without access to federal
subsidies would have been freed from complying with the employer mandate because
penalties for non-compliance are only triggered if one employee receives a subsidy
for health insurance through an exchange. Without the subsidies, no penalty would
be tiggered. Considering the actual outcome, employers, with 50 or more employees,
are now subject to ACA penalties, which is triggered when one of its full-time employees
receives a subsidy.
Why does it matter?
As shown above, not everyone stays up to date on health care reform news. Since
2010, employers have had to accommodate changes and delays in the law, learn complex
regulatory guidelines, and be challenged to meet those requirements in order to
stay compliant. While the ruling does not dictate that employers offer benefits
directly to their employees or through the exchange, employers should take this
as a cue to evaluate their benefits offerings and health care strategies.
While this may not have changed anything now, there are still reporting requirements
that employers must comply with. Failing to do so will result in fines and penalties
for employers of every state.
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Affordable Care act subsidies
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