The Supreme Court is expected to issue its decisions on questions related to The Affordable Care Act (ACA) by the end of June. It would not be an exaggeration to say that millions of words have already been written regarding the Supreme Court's review of the ACA. However, what has been missing from most of the hours of cable TV coverage, and thousands of newspaper, magazine and internet articles, is a discussion of how various court decisions will affect employer sponsored group health plans.

This review will not attempt to predict an outcome, or provide a detailed review of the various legal arguments and principals involved. Rather, we try to present a summary of the impact that different court decisions will have on employers as they begin to prepare for significant elements of the ACA scheduled to go into effect in 2014.

Brief review of what the Supreme Court is considering

In March, the Supreme Court heard arguments on four specific issues. While there have been various court challenges to the ACA related to other issues, these are the only questions the Supreme Court has agreed to consider this term.

Questions related to the so called "individual mandate"

• Can the Court even rule on the individual mandate, or should the decision be put off until 2015?
  • There is a technical argument that the case cannot be decided until 2015, after a taxpayer is actually required to pay a penalty for not having health insurance. If the court were to adopt this approach it will not even rule on the next two questions at this time.
• Is the individual mandate constitutional?
  • If the court decides it can rule on the individual mandate at this time, the next question it will address is if that requirement is constitutional.
• If the individual mandate is struck down, is the entire law unconstitutional?
  • Finally if the court decides that the individual mandate portion of the ACA is unconstitutional, the court will then decide if only that portion of the law must change, or if the entire law would fall. This answer depends on the court's decision whether the individual mandate requirement is "severable" from the rest of the law.

Medicaid Expansion

• Can the Federal government require states to pay costs related to the expansion of Medicaid?
  • Beginning in 2014 the ACA expands the eligibility for Medicaid to any individual with household incomes up to 133% of federal poverty level (FPL). Individuals with a household income up to 138% of FPL will be eligible for Medicaid since the eligibility formula ignores the first 5% of household income.
  • Initially the federal government will pay 100% of the costs of the newly eligible individual, but beginning in 2020, states are required to pay for 10% of the total costs incurred by these individuals. A number of states have filed suit to block this requirement, arguing that the federal government cannot require them to pay a portion of the expanded coverage.

While every effort has been taken in compiling this information to ensure that its contents are totally accurate, neither the publisher nor the author can accept liability for any inaccuracies or changed circumstances of any information herein or for the consequences of any reliance placed upon it. This publication is distributed on the understanding that the publisher is not engaged in rendering legal, accounting or other professional advice or services. Readers should always seek professional advice before entering into any commitments.