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The Next Wave of PPACA Litigation?

The Next Wave of PPACA Litigation?

July 13, 2012

Authored by: benefitsbclp

Just when you thought we were done with lawsuits over health reform, you may be surprised to learn that there is and could be more litigation in 2015.  Several dozen cases have been filed by various religious organizations pertaining primarily to mandates with respect to contraception.  Later litigation, if it arises, will likely be about the employer “play or pay” (aka shared responsibility) penalties/taxes.

Under PPACA, the employer penalties/taxes are triggered when an employer either (a) doesn’t offer coverage or (b) offers coverage that is “unaffordable” or “does not provide minimum value” (we’re still waiting on definitive guidance on those terms).  However, for the penalties/taxes to be triggered, at least one of an employer’s employees has to receive premium assistance (i.e., a tax credit) or a cost-sharing reduction on insurance purchased through an exchange.  However, the tax credit in Section 36B of the tax code requires that the exchange be established by a State (whether this State-run exchange limitation also applies to cost-sharing reductions is less clear).

Here’s the rub: if a State fails to implement an exchange on its own, the federal government is supposed to create a fallback exchange for that State.  But note the last sentence in the paragraph above.  According to the statute, policies purchased on a federally-run exchange are not eligible for the tax credits (or, possibly, cost-sharing reductions).  This means that, in a State with a federally-run exchange, it is theoretically possible for an employer not to be assessed a

Health Care Reform: What Are You Worried About? Tell Us!

We’re working on putting together a series of roundtables to help our clients and friends discuss their worries and strategies to deal with health reform/PPACA now that the Supreme Court has weighed in.  We want to make sure the program is helpful and impactful so we want to hear from YOU.  What are your biggest compliance concerns?  What do you want to hear more about?

  • Summaries of benefits and coverage,
  • Form W-2 reporting of the cost of health coverage,
  • $2,500 limit for health FSAs,
  • How to handle medical loss ratio rebates,
  • Preparing for the 2013 increase in Medicare tax,
  • 90-day limitations on waiting periods,
  • The “shared responsibility” (aka “play or pay”) penalties for employers,
  • Increased incentives for wellness programs,
  • Non-discrimination rules for insured health plans,
  • Automatic enrollment in health plans for employers with at least 200 employees,
  • Why employers need to consider the impact of the Supreme Court ruling on Medicaid expansion, or
  • Anything else?

What strategies have you heard about that you would like to discuss more?  Please leave us a comment below or drop a line to your Bryan Cave benefits contact and let us know your thoughts!

Other Health Care Reform Posts

Disclaimer/IRS Circular 230 Notice


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 beginning on or after September 23, 2012. All of the other market-reform mandates continue to be law.

The Court did not leave PPACA untouched. PPACA provided that the Federal Government would pay 100% of the cost of Medicaid expansion through 2016, with a gradual decrease in the years following that would need to be picked up by the States. If a State did not agree to expansion, PPACA permitted the Secretary of Health and Human Services to revoke all federal Medicaid funding for that state. The Court found this provision of Medicaid expansion to be unconstitutional because it gave States

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 the law down.  The Court could conclude that actions taken to date should not be disturbed, thus preventing a retroactive undoing of the law.  For example, the Court could conclude that because the mandate is not scheduled to be effective until 2014, there is not a need to undo actions taken between 2010 and the issuance of its opinion.  In taking such a position, the Court would be taking a practical approach.

However, the Court could also conclude that the law was essentially void from the start.  What then? Some dependent coverage that was not taxable would become so.  Employers

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 likely would and, if it does, that means there would be no more elimination of pre-existing condition exclusions.  However, due to HIPAA portability and creditable coverage rules, most group health plans have already eliminated, or substantially eliminated, preexisting condition exclusions, so it is unlikely that this will have much practical effect.

However, the elimination of the mandate alone, or the mandate plus option, has implications for employers who are considering eliminating coverage and allowing their employees to purchase coverage on the exchange.  Even though a recent widely-reported study said that most employers plan to keep coverage, for some

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 far from over.  While this is the result that Chris predicted in October, it became much less of a certainty after Justice Kennedy asked the U.S. Solicitor General if he had a “heavy burden” to demonstrate that the individual mandate was constitutional.

So what if PPACA survives?  The short immediate list of “to dos” includes:

  • Summaries of benefits and coverage are due for the first open enrollment beginning on or after September 23.
  • Form W-2 reporting of the cost of health coverage will be required for most employers for 2012.
  • Employers will need to amend

Does Your EAP or Wellness Program Need a Summary of Benefits and Coverage?

Even though health reform’s legal status is up in the air, plan sponsors are still taking cautious steps forward to make sure they are ready if it survives the Supreme Court challenge. One of those steps, which is coming soon, is the Summary of Benefits and Coverage requirement, which has to be initially provided for the first open enrollment period beginning on or after September 23, 2012.

Many plan sponsors mistakenly assume that their employee assistance programs (EAPs) or wellness programs are not subject to these requirements. However, as we discussed in our post on W-2 reporting of health coverage, EAPs that provide counseling (even for only a few sessions) and wellness programs that provide medical care are technically group health plans under ERISA. Among other implications, this means they are subject to SBC requirements.

That said, plan sponsors do have some structuring alternatives that may help ease compliance with this requirement and avoid the need for a separate SBC. For example, if a plan sponsor documents the EAP or wellness program as part of its group health plan, a separate SBC for the EAP or wellness program may not be required. However, the plan sponsor may need to tweak the SBC disclosures to take into account these additional benefits. The EAP or wellness provider may not be equipped to help complete the SBC, and any insurer or TPA (for a self-funded plan) may not be aware that EAP or wellness services are being

IRS Fires Shot Across the Bow on Health Reform Minimum Value and Reporting Guidance – Part 3

As we have posted about previously, the IRS has requested comments on the determination of “minimum value” (discussed here) and reporting on “minimum essential coverage” (discussed here).  In this, our final post of the series, we summarize the IRS’s request for comments regarding reporting by employers subject to “play or pay” penalties in Notice 2012-33.

Beginning in 2014, employers who could be subject to PPACA’s “pay or play” penalties must file returns with the IRS that include the following information:

  • Name and EIN;
  • The date the return is filed;
  • A certification of whether the applicable large employer offers its full-time employees (and their dependents) the opportunity to enroll in minimum essential coverage under an eligible employer-sponsored plan;
  • If so, a certification of:
    • The duration of any waiting period;
    • The months during the calendar year when coverage under the plan was available;
    • The monthly premium for the lowest cost option in each enrollment category under the plan; and
    • The employer’s share of the total allowed costs of benefits provided under the plan.
  • The number of full-time employees for each month of the calendar year;
  • For each full-time employee, the name, address, and taxpayer identification number (TIN) of the employee and the months (if any) during which the full-time employee (or any dependents) were covered under the eligible employer-sponsored plan; and
  • Such other information as may be required by the Secretary of the Treasury.

Companion returns with the above information (except

IRS Fires Shot Across the Bow on Health Reform Minimum Value and Reporting Guidance – Part 2

In addition to requesting comments on the determination of “minimum value” (discussed in our prior post here), the IRS is also asking for comments regarding the information reporting requirements regarding “minimum essential coverage” under PPACA and for reporting by employers subject to “play or pay” penalties.

Minimum Essential Coverage Reporting. Under PPACA, every health insurance issuer, self-funded plan sponsor, governmental agency administering governmental health insurance programs, and any other entity that provides minimum essential coverage is required to file annual returns reporting who is covered under its plan or policy. For insured plans, the IRS intends to require the insurer to report.

The reporting must include, name, address, taxpayer ID number (usually a social security number) of each covered person, dates of coverage during the calendar year, and any other information Treasury may require. Additional reporting is required for policies offered through an exchange.

An employer must also separately report its own name, address, and EIN, the portion of the premium that it pays, and any other information Treasury may require.

Reporting is made to the IRS with a copy provided to each individual. It will be effective for coverage on or after January 1, 2014.

Why do we have to report this? Employers will want to report this information to avoid being hit with “play or pay” (or “shared responsibility”) penalties.  Employees eligible for minimum essential coverage are not eligible for the tax credit to help them defray the cost of health insurance from the exchange. If

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