For Benefit Plan Sponsors, Supreme Court Decision on PPACA is a Whimper, Not a Bang

28 June 2012 Publication
Author(s): Samuel F. Hoffman Leigh C. Riley

Legal News Alert: Employee Benefits & Executive Compensation

The long-anticipated decision by the U.S. Supreme Court (sometimes referred to in the press as the SCOTUS decision) regarding the constitutionality of the individual mandate portion of the Patient Protection and Affordable Care Act (PPACA) was issued this morning. As a reminder, the individual mandate requires most Americans to either buy health insurance coverage or pay a tax to the federal government starting in 2014. For employers (and their legal counsel), the constitutionality of the individual mandate was not particularly important in and of itself. What made this decision important was the possibility that the individual mandate portion of the PPACA would be found unconstitutional, in which case the Supreme Court also might strike down the entire law. If the entire law was stuck down, then all of the changes made to group health plans the past few years to comply with PPACA would have been for naught.

Drum roll, please … none of that happened. The Supreme Court held that the individual mandate was an appropriate exercise of Congress’s taxing authority and thus was constitutional. Accordingly, the Court never had to grapple with whether the entire law was invalid. As such, PPACA continues to be effective.

So, for now, it’s business as usual. Group health plan sponsors will need to continue to get ready to issue Summaries of Benefits and Coverage during the next open enrollment period, reduce the limit on medical flexible spending account contributions to $2,500 for plan years starting in 2013, decide whether the existence of the health insurance exchanges starting in 2014 will or will not impact how the employer provides health care to its employees and retirees, and otherwise continue complying with the PPACA. Back to work, everyone.

Legal News Alert is part of our ongoing commitment to providing up-to-the-minute information about pressing concerns or industry issues affecting our clients and colleagues. If you have any questions about this Alert or would like to discuss the topic further, please contact your Foley attorney or the following individuals:

Samuel F. Hoffman
San Diego, California

Leigh C. Riley
Milwaukee, Wisconsin
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