On Jan. 31, 2011, the U.S. District Court for the Northern District of Florida ruled that the health care reform requirement, the so-called "individual mandate," set forth in Section 1501 of the Patient Protection and Affordable Care Act (PPAPA), which, beginning in 2014 will require that everyone (with certain limited exceptions) purchase federally-approved health insurance, or pay a monetary penalty, exceeds Congress' power under the Commerce Clause. Significantly, the judge held that the "entire Act must be declared void" because "the individual mandate and the remaining provisions are all inextricably bound together in purpose and must stand or fall as a single unit."

The Florida suit is one of a number of legal challenges to the reform law throughout the country. Two other federal judges have upheld the individual mandate, but a federal judge in Virginia also recently ruled that the mandate violates the U.S. Constitution. However, while the Virginia judge ruled that the individual mandate is severable, the Florida judge went further and declared that the individual mandate is not severable, meaning that the entire health care law is unconstitutional.

The conflicting rulings in the district courts have led many to believe that the challenge will eventually be decided by the U.S. Supreme Court. The Florida case is now quite likely headed for the Eleventh Circuit Court of Appeals.

In terms of the immediate impact of the case, in the ruling, the judge stated that "officials of the Executive Branch will adhere to the law as declared by the court." On the other hand, according to published reports, government officials have indicated that they do not have plans to halt implementation of the law. The issue of whether or not the law will continue to be implemented may be decided if and when the government appeals the decision to the Eleventh Circuit.

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As expected, on Jan. 19, 2011, the U.S. House of Representatives approved by a vote of 245-189 legislation that would repeal PPACA in its entirety. Despite its passage in the House, the repeal legislation will likely not become law this session. This is because the Democratic-controlled U.S. Senate will probably not act on the legislation and President Obama has stated that he will veto any efforts to repeal PPACA in its entirety. The House vote, therefore, was largely symbolic and likely an effort to gain momentum for more gradual reform.

Click here to view the Legislation. 

On Jan. 20, 2011, the Secretary of the Department of Health and Human Services (HHS) announced a new funding opportunity for grants to assist states in implementing health insurance exchanges. When PPACA is fully implemented in 2014, the exchanges will provide individuals and small businesses with a marketplace to find and compare health insurance options. In July 2010, $49 million in exchange planning grants were awarded by HHS, under Level One of the Establishment Grants which is the first step of the process for each state to establish an exchange. This new grant opportunity under Level Two Establishment Grants is designed for states that have made sufficient progress in the initial Level One Establishment project period in order to ensure the states have the resources they need to establish the exchanges.

Click here to view the press release. 

Click here to view the exchange establishment funding announcement. 

The Internal Revenue Service (IRS) issued three benefits-related publications, Publications 969, 970 and 4894. Publication 969 provides basic information about health savings accounts (HSAs), health flexible spending accounts (FSAs), Archer medical savings accounts (MSAs) and Medicare Advantage MSAs, including brief descriptions of benefits, eligibility requirements, contribution limits, and distribution issues. Publication 970 provides information relating to various education-related federal tax benefits, including employer-provided education assistance and work-related education. Publications 969 and 970 include several updates for use in preparing 2010 federal income tax returns.

Publication 4894 is a two-page summary of key tax changes that were enacted as part of PPACA. Topics include Form W-2 reporting of the cost of employer-sponsored health coverage (optional for 2011), tax-free health coverage for dependent children under age 27, the prescription requirement for over-the-counter drugs, the small business health care tax credit, and the expanded adoption credit.

• Publication 969 
• Publication 970 
• Publication 4894 

On Jan. 25, 2011, California Department of Insurance Commissioner Dave Jones announced that the Office of Administrative Law (OAL) approved a request for an emergency regulation to give the Commissioner the authority to enforce the 80 percent medical loss ratio (MLR) in the individual market established under PPACA that went into effect on Jan. 1, 2011. The MLR is defined as the percentage of premium revenues an insurer pays for medical services, as opposed to insurer profits, marketing, and overhead.

Click here to view the press release. 

Click here to view the OAL approved request. 

On Jan. 18, 2011, the U.S. Supreme Court announced that it would not hear a challenge to the District of Columbia's (D.C.) 10-month-old same-sex marriage law, six months after the D.C. Court of Appeals narrowly upheld the law. Under D.C.'s same-sex marriage law, passed in 2009, D.C. recognizes same-sex marriages performed outside D.C. and allows such marriages to be performed in D.C. itself. The appeal to the Supreme Court, docketed as No. 10-511, did not directly challenge the legality of D.C.'s same-sex marriage law, but instead challenged the D.C.'s Board of Elections and Ethics ruling that the law could not be subjected to a referendum. Opponents of the D.C. law will likely petition the U.S. Congress to intervene and force a referendum.

On Jan. 18, 2011, the U.S. Supreme Court, docketed as No. 10-511, announced that it would not hear a challenge to the District of Columbia's (D.C.) 10-month-old same-sex marriage law, six months after the D.C. Court of Appeals narrowly upheld the law. Under D.C.'s same-sex marriage law, passed in 2009, D.C. recognizes same-sex marriages performed outside D.C. and allows such marriages to be performed in D.C. itself. The appeal to the Supreme Court did not directly challenge the legality of D.C.'s same-sex marriage law, but instead challenged the D.C.'s Board of Elections and Ethics ruling that the law could not be subjected to a referendum. Opponents of the D.C. law will likely petition the U.S. Congress to intervene and force a referendum.

Click here to view Supreme Court Case Docket for No. 10-511. 

Click here to view Supreme Court Order List for Jan. 18, 2011. 

On Jan. 31, 2011, Governor Pat Quinn signed SB 1716, the "Illinois Religious Freedom Protection and Civil Union Act." The Act defines "civil union" as a legal relationship between two persons, of either the same or opposite sex, established in accordance with the Act. It allows couples of both same and opposite sex to enter into civil unions, giving them the same legal obligations, responsibilities, protections, and benefits automatically available to married heterosexual couples. The Act does not permit same-sex couples to marry in Illinois.

This new law has implications for employee benefits. Specifically, employers that offer insured health benefits issued in Illinois as well as pension benefits must provide such benefits to parties in a civil union and must recognize same-sex marriages and civil unions performed outside the state. These employers should review and revise plan documents to accurately reflect the new civil union requirements, contact their insurance carriers to determine whether the policy must be modified to comply with the law, and contact their tax accountant to discuss whether the change will result in imputed income for federal tax purposes. Employers with self-funded plans may continue to limit spousal benefits to opposite-sex couples.

The Act protects the rights of religious institutions to define marriage as they choose. The obligations, responsibilities and protections provided in the Act are available to couples in a same-sex or opposite-sex relationship, where each individual is: (1) 18 years of age or older; (2) not in an existing marriage or civil union; and (3) not related to the other. Further, the Act provides that a marriage between persons of the same sex, a civil union, or a substantially similar legal relationship other than common law marriage, legally entered into in another jurisdiction, shall be recognized in Illinois as a civil union. The Act will go into effect on June 1, 2011.

Click here to view the press release. 

Click here to view the full text of SB 1716. 

On Jan. 3, 2011, the Missouri Department of Insurance, Financial Institutions and Professional Registration Insurance issued Bulletin 11-01. The bulletin relates to House Bills 1311 and 1341, which mandate insurance coverage for various treatments for autism spectrum disorders, in addition to establishing a licensure process for certain providers of autism services. The mandate applies to plans written, issued, or renewed in Missouri on or after Jan. 1, 2011, and to policies issued outside of the state that cover Missouri residents.

Bulletin 11-01 provides guidance to the industry and the public as to certain provisions of the mandate, including claim coding, failure to provide care, improper claim denials, and issues relating to transition and implementation of the mandate.

Click here to view Missouri Bulletin 11-01. 

Click here to view Missouri Revised Statutes. 

The Ohio Department of Insurance issued Bulletin 2011-04 to notify carriers that PPACA-compliant policy form outlines for non-grandfathered plans are now available on the Department's website. This notification is important because the state filed and was approved for the waiver by HHS for the annual limit restriction with respect to "mini-med" policies. Of interest to employers will be that conversion policies were included within the policies that were approved for the waiver. As such, conversion policies issued in Ohio that are offered to individuals who are no longer eligible for coverage under a group policy will not be required to comply with the annual limit requirement under PPACA until Sept. 23, 2011, when another waiver will be required.

Click here to learn more. 

The Oregon Department of Consumer and Business Services recently released its fifth-annual "Health Insurance in Oregon" report, which provides information on commercial health insurance regulation in Oregon. Of interest to employers, the report provides background on the evolution of employer-based health coverage in Oregon, implementation of PPACA on a state level, and Oregon's own health care reform proposals.

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The Wisconsin Commissioner of Insurance has promulgated an emergency rule creating Ins. 3.35, Wis. Adm. Code, which specifies guidelines for the colorectal cancer screening that must be covered and the factors for determining whether an individual is at high risk for colorectal cancer. The proposed rule requires insurers and self-funded governmental plans to provide coverage of at least three of four identified screening tools: fecal occult blood test, flexible sigmoidoscopy, colonoscopy and computerized tomographic colonography. The determination for appropriate screening test or procedure is based upon medical necessity and is eligible for internal and independent review. The rule also acknowledges that PPACA does not mandate this coverage until Jan. 1, 2014, but provides an analysis of surrounding states which already have existing rules, including Illinois and Minnesota. This emergency rule is effective Dec. 1, 2010, and will remain in force for 150 days.

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Under legislation signed by Gov. Scott Walker on Jan. 24, 2011, contributions to HSAs are now tax deductible beginning in 2011 and will benefit taxpayers filing returns in 2012. This change brings Wisconsin into line with federal income tax laws and 46 other states.

Click here to learn more.