June 28, 2012
Authored by: benefitsbclp
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 no real choice but to accept the expansion. Accordingly, the expansion provision was narrowed, so that States may not have existing Medicaid funds withdrawn for their failure to comply.
Despite the Court’s ruling, PPACA will undoubtedly remain subject to political challenge. In the meantime, implementation for group health plans continues.