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Supreme Court Upholds Health Reform – Implementation Marches On

In a landmark 5-4 decision announced today, the United States Supreme Court upheld key provisions of the Patient Protection and Affordable Care Act (“PPACA”). Although the individual mandate – wherein individuals must obtain health insurance coverage or pay a penalty – was determined to be unconstitutional under the Commerce Clause, Chief Justice Roberts, writing for the majority, concluded that the individual mandate may be upheld as within Congress’s power under the Taxing Clause.

As the individual mandate was upheld, the Court did not need to reach the issue of severability from the myriad other market-reform mandates. The result for companies is that implementation of health care reform continues unabated. Dependents, if covered, must be covered until age 26. Annual and lifetime dollar limits are still subject to regulation and prohibition, as applicable. Group health plans must still provide a Summary of Benefits and Coverage (“SBC”) for open enrollments

AHIPocryte? Maybe, maybe not.

AHIPocryte? Maybe, maybe not.

June 27, 2012

Authored by: benefitsbclp

Rick Ungar’s recent article in Forbes highlighted what he called “the ultimate in duplicitous behavior” by the insurance trade group, America’s Health Insurance Plans (AHIP). According to Ungar, it seems AHIP was spending $102M to defeat PPACA while simultaneously publicly supporting it (see also here for the article Ungar cites).

I have three thoughts about this: (1) I do not support duplicitous behavior; (2) I also do not think we should be surprised by it; (3) I’m not sure this is exactly as duplicitous as it appears.

First, look at this statement by AHIP president from March 18, 2010  It was issued 5 days before the first of two health reform bills was signed and it’s not exactly the equivalent of gushing PPACA fan fiction.  And lest you think that this was a last minute change in position, here and

Keeping up with the IRS

Keeping up with the IRS

June 25, 2012

Authored by: benefitsbclp

With the benefits community waiting with baited breath to hear how the Supreme Court will rule on health care reform, it is easy to get behind on IRS guidance. Since the IRS has not stopped issuing guidance, we wanted to alert you to a few minor changes that may have flown under the radar:

  • IRS issued a revised Form 2848 in March 2012. The March 2012 version of Form 2848, Power of Attorney and Declaration of Representative,  can only cover one taxpayer; thus, separate Form 2848s should be completed for joint or multiple taxpayers. According to an Employee News Release dated June 8, 2012, beginning March 1, 2012, the IRS’s three Centralized Authorization File processing sites:
    • Discontinued processing all powers of attorney that are not submitted on either the October 2011 or March 2012 versions of the Form 2848 (unless a completed Form 2848 on one

Part 3 – What if…Everything You Know (About PPACA) is Wrong?

This is our third of three “What if” posts discussing the likely outcomes of the Supreme Court hearings on the health care reform law.  Our first two posts are available here and here.

What if the Supreme Court invalidates the Patient Protection and Affordable Care Act (aka health reform)?  To do that, the Court would have to conclude that the individual mandate requiring all U.S. citizens to buy health insurance or pay a penalty was not a permitted exercise of Congress’s power under the Constitution.

A lot of people (including Chris) never thought this would even be a serious debate. However, once Justice Kennedy asked the U.S. Solicitor General if he had a “heavy burden” to demonstrate that the mandate was constitutional, everyone’s thoughts about the possible outcomes changed.

The Court could take any of a variety of routes if it strikes

Part 2 – What if…We Have no Mandate?

Part 2 – What if…We Have no Mandate?

June 22, 2012

Authored by: benefitsbclp

This is our second of three “What if” posts discussing the likely outcomes of the Supreme Court hearings on the health care reform law.  Our first post is available here.

In our prior post, we discussed what would be left to do if the Supreme Court left the health reform law alone.  Recall, however, that one issue the Court has to grapple with is whether the mandate is fully or partially severable from the statute.  What if the Court takes a more Solomonic view and excises the mandate alone or the mandate plus the community rating and guarantee issue provisions (we’ll call that the “mandate plus” option)?

Well, first of all, almost everything we said in Part 1 is still true.  We say “almost” because it is unclear whether the elimination of the guarantee issue provisions would include both individual and group plans.  It

Part 1 – What if…SCOTUS Says, “Long Live Health Reform!”

This is the first in our series of “What if” posts on the possible outcomes of the Supreme Court hearings on the health from law.  Please come back for parts 2 and 3!

The Supreme Court is likely to release its decision on the Patient Protection and Affordable Care Act (aka health reform) in the very near future (likely no later than the 28th).  Reading the proverbial tea leaves, it seems likely that the Court will not kick the can down the road by saying the Anti-Injunction Act applies, so we will probably get a decision upholding some, all or none of the law.

If the Supreme Court upholds the law in its entirety, then there is good news and bad news.  The good news is that all that work you did to prepare for PPACA was not in vain.  The bad news is that the work is

How Will Taxmageddon Affect You?

June 20, 2012


How Will Taxmageddon Affect You?

June 20, 2012

Authored by: Serena Yee

In the event the U.S. Supreme Court strikes down the entire 2010 health care reform bill, individual and married taxpayers with income in excess of $200,000 and $250,000 respectively will dodge the 0.9% Medicare surtax on earned income and 3.8% Medicare surtax on most investment income scheduled to take effect January 1, 2013.  But that’s not the end of the scheduled tax increases for 2013.

Assuming Congress takes no action and the Bush-era tax cuts expire at the end of 2012, the individual tax rates for 2013 will be as follows:




Ordinary Income Tax Rates andShort-Term Capital Gains Rates













Long-Term Capital Gains Rates

15% (35% income tax bracket)

15% (33% income tax bracket)

15% (28% income tax bracket)

Defined Benefit Plans – How Would Your Plan Fare in an IRS Audit?

In its June 8, 2012 edition of the Employee Plans News, the Internal Revenue Service (“IRS”) gave interesting insight into areas of non-compliance revealed in a targeted audit of defined benefit pension plans. These audit findings create a helpful checklist for defined benefit plan sponsors to review the status of plan compliance efforts. Borrowing from the list of areas of non-compliance discovered by agents in these recent audits, here is a list of topics you may want to review for your company’s defined benefit pension plan:

  • Date annual funding notices and distribute timely
  • Date elections to use/reduce prefunding and/or carryover balances and make the election timely
  • Require actuaries to give AFTAP certifications timely
  • Actuarially increase late retirement payments
  • Value assets consistently for purposes of Sections 430 and 436 of the Internal Revenue Code
  • Issue relative value disclosures in distribution

IRS Proposes Regulations on Substantial Risk of Forfeiture

The IRS has released proposed regulations under Section 83 of the Internal Revenue Code to refine the concept of what constitutes a substantial risk of forfeiture for the purpose of narrowing the scope of the concept.

The proposed regulations are in response to case law, tracing back as far as 1986, which the IRS claims has created confusion over the appropriate elements of what may constitute a substantial risk of forfeiture.

In the proposed regulations, the IRS clarifies that a substantial risk of forfeiture may be established only through (1) a service condition or (2) a condition related to the purpose of the transfer, such as a performance condition relating to the services provided by a service provider. In addition, the proposed regulations further clarify that in determining whether a substantial forfeiture exists based on a condition is related to the purpose of the transfer, both the likelihood

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