ruling

Domino Effect: Challenge to Subsidies Make Mandates and Penalties Endangered Species?

If the healthcare picture wasn’t already muddy enough, now we have more bumps in the road ahead. Most of the press coverage and discussion over this past week has been focused on the subsidy ruling and where that’s headed. And, rightly so.

However, the domino effect may be equally impactful, maybe even more so. Expect the subsidy discussion to broaden and include the legitimacy and relevance of the Affordable Care Act (ACA) imposed coverage mandates and penalties – both for individuals and for employers.

domino effect, dominoes falling

If the subsidies are struck down, even temporarily, it stands to reason that mandates and penalties – both individual and employer – will also be called into question and perhaps disappear.

If in the majority of states subsidies are not available for eligible individuals, then the vast majority of individuals in those states would have no mandate to purchase coverage. It follows then that employer penalties in those states would effectively disappear.

By many accounts, the challenge to the subsidies is headed to the Supreme Court.  Whether or not that really happens is up in the air and still anyone’s guess. If it does, then short of some sort of political resolution (possible but highly unlikely) we will have to wait at least a year or more for resolution. And, all bets would be off on the outcome.

Until then the subsidies remain available and mandates and penalties remain in play.

What does this mean for employers?

A sure signal of plenty more bumps in the in the healthcare road until things settle down with the ACA. Expect plenty of foggy conditions and winding roads under construction before any “new normal” sets in.

Make sure you pick the right driver when it comes to driving your health coverage bus.

Work with people that:

  • Are keenly tuned in to what’s going on;
  • Are savvy in understanding and interpreting your interests;
  • Are not afraid to innovate, and
  • Are nimble enough to help you make the right adjustments as conditions change.

You’ll need them to help you avoid any obstacles in the road, keep your employees protected and make sure the bus keeps traveling in the right direction.

Getting ahead of ACA Strategies

The IRS is trying to keep employers in the group health market. The new ruling is somewhat complicated. What a big surprise, huh?

The IRS is saying that the ACA requires that plan sponsors ensure that there are no limits on the mandatory essential health benefits ACA requires, also known as “lifetime maximums.” If a group plan does not guarantee that the insured has all the essential health benefits required by ACA, then the plan is not qualified.

This article seems to be based on a premise that the plan sponsor, in this case, the employer, has no idea what the insured actually has. Therefore, if a benefit is issued, but th member does not have the ACA essential health benefits, then the plan does not qualify and is subject to tax.

But, if the plan sponsor does guarantee that the insured does possess the ACA minimum benefits, then the group sponsor is compliant.

The administration does not want employers simply giving money to employees to pay claims. This will get them further, rather than closer, to achieving their goal that Americans have coverage that will not run out due to lifetime limits.

To read the entire article, read IRS Bars Employers From Dumping Workers Into Health Exchanges.

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